Bridging the Talent Gap in Generics

Only a few years ago generic drug companies were largely regional players that excelled at rapid R&D and agile supply chain management. But rapid globalization, consolidation, and increasing complexity require new management capabilities that many generics companies lack. Now, they must not only find executives with the requisite capabilities for managing a global yet highly local business, but also maintain the entrepreneurial culture on which their competitive advantage depends.

Two decades ago, as branded pharmaceutical companies globalized, grew, and consolidated, they faced a similar talent gap. But the nature of the generics business won’t allow generics companies to simply follow big pharma’s precedent. While markets for branded drugs operate in largely similar fashion in all markets around the world, generics markets often operate differently.

For example, in the United States, generics companies operate in a substance market, where the drug is named for the chemical compound and success lies in qualifying it for market and launching it quickly. In Europe, however, branded generics have played a far larger role, with many companies developing a sales force and medical marketing teams. To manage these and other diverse markets simultaneously, global generics companies will need new talent and new capabilities, primarily in three critical areas:

• Strategic marketing: Global executives will need to be able to manage marketing in markets that differ in patent cycles, barriers to entry, and successful business models (such as developing a sales force and medical marketing versus distributor-driven business). The ability to develop and manage different models of presence in different markets is highly complex, and few companies have done it on a global scale.

• Operations: With increasing consolidation, economy of scale will be critical. With increasing globalization, agile sourcing will be similarly important. Companies that achieve critical mass in manufacturing and the ability to source raw materials in an environment that is already seeing shortages will be the big winners.

• Human resources: On a level playing field, the ability to attract and manage top talent can be decisive for competitive advantage. Global generics companies will therefore urgently need senior-level HR executives who can oversee world-class talent management, succession planning, international benchmarking of talent, and innovative reward and retention policies. At the same time, they must be able to nurture the kind of entrepreneurial cultures, flat organizations, and fast decision-making that first made regional generics companies successful.

Where global generics companies find sorely needed new competencies will depend upon the precise nature of the job to be filled. For example:

• Strategic marketing talent may be found among big pharma executives who oversee mature products in an international environment.

• Executives from the food or cosmetics industries may possess the requisite capabilities in key account management, distribution, demand management, and category management.

• Talent with the entrepreneurial mentality that the generics business rewards may be found in the fast-moving consumer goods industry.

• Capability in global, strategic HR is widely distributed over many industries and may be found in many kinds of global companies.  

However, in order to find the right capabilities, generics companies will have to first break out of their traditional mindset about sources of talent. Traditionally, the industry has resisted importing executives from other industries. They have also been reluctant to bring in executives from branded pharma on the grounds that they are insufficiently entrepreneurial. While such resistance made sense for regional players, success in diverse global markets requires precisely the competencies found in other industries and particularly among many executives in global branded pharma.

The emerging talent gap in generics also has implications for the careers of individual executives in both branded and generics companies. The career opportunities in global generics are unprecedented, and there is still time to seize them. Before doing so, however, executives should consider some basic questions:

• Do I want to be in a sophisticated, biotechnology-rooted niche operation or in a large-growth generics company with highly complex business processes?

• Am I temperamentally suited to the demands of a fast-growing, non-hierarchical organization characterized by ambiguity, speed, and sometimes ill-defined lines of authority?  

• As an executive in a generics company, how is global growth likely to affect the market value of my capabilities in the future?

• What can I do to make sure that I am prepared for that future?

With brand name drugs worth more than $43 billion in sales expected to expire through 2009, and the generics industry growing rapidly, branded and generic companies-and individual executives-face a future that will look far different from the present. How the story plays out will depend on the choices and commitments that are made now. For companies, merely plucking the right talent from the right places will not be enough. The top leadership of the organization must also commit to giving these new executives the long-term support they need to adapt to the unique requirements of the generics business. For executives, the challenge is to prepare now for the changes that are coming in both sectors and position themselves to take full advantage of them.