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Compensation trends spotlight: Pharmaceutical and Health Sciences

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Beyond Data

December 2021

Compensation surveys and industry research highlight key trends in the Pharmaceutical and Health Sciences industry.

The Pharmaceutical and Health Sciences sector played a key role during the COVID-19 pandemic. To deal with the global crisis, traditional competitors teamed up to accelerate research toward developing vaccines against the coronavirus. This “new normal” mindset compelled organizations to rethink their operational models.

Based on our 2021 compensation surveys and research, we observed a few key salary trends in 2022 for the industry.

Salaries increased in 2021 by around 4.5% globally and is expected to grow by 4.6% in 2022. The increases in 2021 are highly impacted by inflation caused in part by governments’ response to the pandemic, in addition to sudden increases in talent demand as coronavirus lockdown restrictions faded.

Actual bonus payouts are trending close to or slightly above targets for most of the major markets in the industry. The vast majority of organizations have not taken nor intend to take any specific action on bonuses/incentive plans. Only a small percentage will change or consider changing their performance metrics/measures in the near future.

Life Science organizations are beginning to re-evaluate their incentive plans for 2021 amid great uncertainty and risk. Several European companies in the sector are reviewing the cascade of award values, eligibility and receivership to ensure they can remain competitive especially in the US, but increasingly in “hot” talent markets within Europe as well.

Several major trends that emerged in 2021 have driven these changes, including:

  • Accelerated investments in AI to transform R&D and help speed up drug discovery and clinical trials
  • Shrinking sales teams and closing manufacturing plants
  • Collaborations reshaping research and development
  • Rebound in clinical trials
  • Re-shoring pharma manufacturing in the U.S. and Europe

Base salary movements

As shown in Figure 1, over 93% of respondents in our most recent Global Salary Budget Planning report indicated that they proceeded with regular salary increases in 2021. Around 6.5% decided to freeze their salaries this year or postponed increases.

The total salary increases remain at the level in the year-over-year salary increase rate from 2020 to 2021 (Figure 2). Organizations remain optimistic with regards to the projected salary increases. Ninety-nine percent of survey participants are expecting to proceed with a regular salary review in 2022. The overall salary increase rate in the sector in 2022 will grow slightly compared to 2021.

Industry in-demand jobs

There are several factors helping to identify in-demand jobs, such as when the number of jobs or people occupying a position is increasing rapidly, when the demand for talent exceeds the supply, or when turnover rates are high. Demand for certain rare skills to get work done can be also an important factor to consider a job as in demand. The salaries for the high demand roles typically grow faster year-over-year in comparison to other jobs. Certain in demand roles may even see a sustained salary increase across multiple years.

Based on current industry trends, we can expect that accelerated investment in AI and focus on big data will increase the demand for jobs with digital skills and data science knowledge. Moreover, the rapid growth of biotech companies creates a high demand for different type of roles within R&D. Reshoring of Pharma/MedTech manufacturing in US and Europe will most probably increase demand for jobs in the production area.

Figure 3 shows the highest paid roles at the professional career level (P3) for the major markets in the industry. The table below shows that Market Access, Medical Affairs and R&D positions remain invariably the best paid jobs in the industry. Digital roles have become highly in demand as well, which is in line with the current industry trends.

Figure 3 – Highest paid roles at the professional level in major markets
Country Job title Highest paid
Brazil Digital Strategy 1
Brazil Customer Application and Customization 2
Brazil Clinical Trials Operations 3
Brazil Functional/Business Area - ERP/CRM Application Customization 4
China Pharmaceutical Research and Development Project/Program Management 1
China Drug Development and Preclinical Studies 2
China Consumer Data, Insights and Research 3
China Market Access 4
France Medical Communications/Liaison 1
France Business Ethics and Compliance 2
France Medical Affairs 3
France Therapy Area Specialist 4
Germany Qualified Person 1
Germany Digital Marketing Generalist 2
Germany Biostatistics 3
Germany Market Access 4
United Kingdom Market Access 1
United Kingdom Personal Data Privacy Compliance 2
United Kingdom Strategic Alliances 3
United Kingdom Clinical Research Outsourcing 4
United States Legal 1
United States Market Access 2
United States Medical Communications/Liaison 3
United States Intellectual Property/Patent Law 4

As in other industries, increased demand for labor, limited talent pools and higher wage expectations will make talent attraction and retention an ongoing struggle for organizations in this industry. In response, many companies are considering options such as increased salary budgets above prior projects, increased workplace flexibility and changes to health and wellness benefits, including retirement plans.

Additionally, organizations are expanding their geographic searches for talent as well as placing a broader emphasis on diversity, equity and inclusion initiatives. Other changes include increased referral bonuses and higher cash sign-on bonuses, but we expect these to be temporary adjustments rather than long-term shifts in practice.

Bonus payout and short-term incentives

Target values are most likely higher in the life sciences industry compared to general industry, especially within the Middle Management and Professional career bands (Figure 4). Actual bonus pay-outs in the life science sector are trending close to or above targets in 2021.

Long-term incentives

As with 2020, long term incentive payouts remain lower than the target values in both general and life science markets. However, LTI payout and eligibility remain higher in selected life science markets compared to peers in the general industry (Figure 5).

The world of work continues to evolve, thanks to digital transformation and the post-pandemic reality. In order for rewards professionals to best respond to the market competition building up around certain jobs, they need to understand how to attract and retain the best talents in high demand jobs as well as how to anticipate hiring and/or attrition issues before these materialize. Access to high-quality compensation market data is critical in supporting organizations’ decision-making process. Our Pharmaceutical and Health Sciences Compensation surveys can bring indispensable help in this difficult task. We invite you for a close collaboration.

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