Cautious Optimism Reigns
Medtech professionals report growth in the industry, but remain uncertain about what the future may hold.
Most didn’t receive an increase in salary last year, nor do they expect (or haven’t received) one this year, but a solid majority of respondents to the Medical Product Outsourcing salary survey for 2010—more than 66 percent—report feeling “secure” or “very secure” in their jobs. In addition, 52.3 reported being “satisfied” or “extremely satisfied” with their level of compensation. A total of 55 percent of those surveyed earned $75,000-$150,000.
On the flip side, a total of 14 percent of respondents said they were “very dissatisfied” with their pay scale.
Many survey-takers—with job titles such as CEO, vice president of business development, manager of supplier quality or director of engineering (21.5 percent were corporate management, followed by sales and marketing, quality assurance and production manufacturing)—noted that while their paychecks may have remained status quo for the past few years as dictated by corporate cost-saving plans, they continue to feel good about the industry and the products being manufactured by their employers. Part of that optimism may stem from the fact that greater than 25 percent have been in the industry for more than 10 years and have experience with the industry’s upsand downs.
Interestingly, and possibly an indicator that the medical device industry is climbing out of its 2009 doldrums, 74.6 percent of the more than 100 medical device professionals surveyed reported that their companies had grown in the past year—most notably through acquisition and expansion of sales in international markets. That’s a dramatic change from last year’s survey results, in which 53 percent reported downsizing their businesses. Notably, 83.1 percent said they didn’t feel threatened by overseas competition—a slight increase compared with last year.
Some of that growth, according to salary survey takers and industry analysts, has translated into modest upticks in hiring as companies—outsourcing firms in particular—prepare for more business.
Around the time the salary survey concluded, ZRG Partners, an executive search, consulting and advisory services firm in Westborough, Mass., released a status report on life-science hiring during the third quarter that supported much of what MPO’s survey respondents indicated.
According to the report, which examined life science/pharma, medical device and supply, and outsourcing and services, the medical device and supply sector showed steady job growthoverall. Broken down globally, however, certain areas were stronger than others. Asia/Pacific, Japan and Australia (APAC) for example, showed a 28 percent increase in medtech hiring. For Europe, the Middle East and Africa (EMEA), overall hiring was down 1.8 percent, while the Americas showed a 1.5 percent increase in overall hiring, ZRG Partners reported.
The report noted that hiring in the outsourcing services sector decreased 1.5 percent during Q3. Hiring demand in EMEA increased by 14 percent with APAC showing flat demand and the Americas decreasing by close to 10 percent. This isn’t necessarily a bad thing, the survey’s authors explained, noting that outsourcing firms actively hired in the last quarter to respond to new business opportunities. The most active hiring function in outsourcing and related services was the IT/finance/executive branches, with a dramatic increase of 90 percent during the quarter, according to ZRG Partners. Sales and marketing hiring decreased globally by 41 percent in the quarter. The report’s authors speculated that current revenue levels and client demand could be causing outsourcing firms to beef up their general talent areas.
Of the three sectors profiled in the index, two sectors showed positive jobs growth and one sector was flat. Pharma and life science led the way in new job growth with a 10 percent rise in the quarter. Medical devices and supply showed 7 percent growth. Outsourcing and services stayed flat in total new opportunities, “but still maintains its position as the most robust in relative hiring opportunities.”
The one functional role that declined quarter over quarter was sales, with a decrease in overall opportunities of 7.2 percent during the quarter. Interestingly, all three regions hired fewer sales reps than the last quarter, however, outsourcing and services posted a sizeable 39 percent drop in sales hiring for the quarter. Pharma/life science had 20 percent decrease in sales hiring while medical device and supply actually increased slightly, with 5 percent more demand compared with the second quarter.
Much of the health in medtech hiring is a result of robust deal-making and investment, ZRG analysts noted. For the past year, outsourcing and services has attracted more than $4.4 billion in investment through 18 deals, compared with $3.5 billion for the pharma/life science sector. However, in the recent quarter, no pharma deals were reported. Medical devices and diagnostics had seven new transactions totaling $300 million.
“Healthcare is experiencing what will probably be one of its best years in terms of U.S. private equity (PE) investment. So far in 2010, PE investors have made 56 investments, totaling over $5.3 billion, targeted at growing businesses in the healthcare industry,” Adley Bowden, managing editor of Pitchbook Data Inc., a private equity deals database, said regarding ZRG’s findings. “Of particular interest to PE investors is the healthcare provider sector, which has seen a record number of deals and dollars invested this year. During the third quarter, this sector led the industry with nine deals, accounting for half of the overall deal flow. In total, the healthcare industry accounted for 13 percent of PE investment during the third quarter, ranking it fourth out of the seven major industries. There is a widespread interest in the healthcare industry by PE investors due to a number of attractive healthcare-specific fundamentals, which will likely continue to drive investment in the industry for the rest of the year andinto 2011.”
However, even after MPO readers reported overall feelings of security and bullishness on the creativity and value proposition of the sector, of concern to a number of the respondents who elected to expand on their feedback was pricing pressures throughout the supply chain resulting in lower margins, as well as market forces (reduced access to investment dollars and a more burdensome regulatory pathway in the United States, for example) that could stifle innovation and new product development.
As one respondent noted: “I’m helping to save lives every day, we need to be able to continue to innovate.”