Eyebrows were raised when healthcare spending started to increase during the 18-month recession of early 2008. Commentators fear the economic crisis made spending uncontrollable.
U.S health expenditures grew to 17.6 per cent of gross domestic product in 2009, or more than $1 of every $6. That set a record.
Political activists decided to make a stand. President Barack Obama’s healthcare reforms were set to give millions access to affordable care. Yet protestors took to the Supreme Court at a constitutional debate in 2012. That followed thousands of Republican protestors who gathered outside the White House when “Obamacare” was passed into law.
Global healthcare spending had continued to rise. The Eurostat database shows total health expenditure per capita increased 6.9 per cent between 2007 and 2009 across Europe.
Total expenditures in the U.S will average 5.6 per cent annually through 2022, it has been predicted. Spending will surpass $5 trillion then, accounting for almost one-fifth of the economy, up from 18 per cent from last year.
The affects on the consumption of medicines, and pharmaceutical expenditures and prices, is evident. High-income countries all showed a decline. In Europe, pharmaceutical consumption dropped 6 per cent between 2007 and 2009, according to the World Health Organization.
Meanwhile, throughout October 2009, drug makers had said they planned to cut nearly 60,000 jobs, more than 60 per cent higher than in the comparable period last year.
Johnson & Johnson (J&J), the healthcare giant, planned to eliminate 6 to 7 percent of its worldwide work force — about 7,000 to 8,200 jobs — as part of a corporate revamping.
The jobs cuts accelerated during the recession. The $41.1 billion merger of Merck and Schering-Plough was projected to eventually result in the elimination of 16,000 jobs.
The $68 billion merger of the drug giants Pfizer and Wyeth was expected to result in a work force reduction of 15 per cent, or about 19,500 jobs. Eli Lilly, which bought the biotech company ImClone Systems in 2008 for $6.5 billion, said it planned to reduce its work force to 35,000.
Clambering to the top of the corporate ladder were managers facing significant challenges. Lay-offs were inevitable. Despite the turmoil, the tide appears to be turning. A rebounding global economy will mean juicer job opportunities for business-savvy managers.
“There are constantly challenges in healthcare, and for those people who are passionate there are endless opportunities to be involved,” says Leslie Wong, an MBA graduate who works as a marketing associate at J&J. “MBAs are now more prepared than ever.”
Yet it is thought that the healthcare and pharmaceutical sectors cannot find enough talented managers to satisfy demand. Leslie chose Rotman School of Management, a Canadian-based business school, because she wanted exposure to the big pharma brands.
A major in Health Sector Management provided her with a route to Janssen, a pharmaceutical firm under the J&J arm. The company recruits directly from campus. “It was a huge consideration to choose Rotman,” says Leslie.
On the edge of Singapore’s international business park, a miss-match of leading companies house some of Asia’s brightest business minds. A bevy of J&J’s 120,000 employees work on the street, in marketing and change management. Many of them are MBA graduates.
“There is a demand,” says Bodi Yuhico, a Nanyang Business School MBA graduate-turned marketing executive at J&J in Singapore. Yet companies are not jumping up and down to snap-up MBA graduates. “It’s not easy, but it’s definitely a plus. You just have to find the companies that are looking for these MBAs, and find a way to leverage the MBA,” he says.
In 2012, J&J hired 83 MBA graduates, ranking number-one for hiring among healthcare companies. In the same year, the firm hired four times more business school graduates than Eli Lilly, its closest hiring competitor. Twelve of those hires came from the Fuqua School of Business.
“The healthcare [MBA] path inside Fuqua definitely gives people an advantage. The program is strong on that,” says Carla Viana, J&J's marketing manager for the Nordic countries. She graduated from Fuqua's MBA program in 2010.
The pharmaceutical sector’s growth is now driving employment skywards. “It’s a growing business and I think there are a lot of very interesting opportunities, and there will be in the future as well,” says Carla.
Business schools such as Fuqua and Rotman are pioneering the health-management buzz. As more MBAs take health-specific tracks, more leading pharma companies are eager to hire graduates in droves.
In 2012, pharma and healthcare companies snapped up 18 per cent more MBA graduates world-wide, according to a recruiter survey by QS. A further 18 per cent growth was projected for 2013. According to GMAC, MBA job rates for healthcare and pharmaceuticals are almost on a par with the consulting function.
“The MBA allowed me to get in easily and I think it continues to give me more opportunities to progress,” says Carla, who has risen through the ranks since a summer internship at the firm.
The mantra of aligning talented MBA graduates with managerial positions in the pharma sector has generated colossal salaries. The average MBA nets more than $100,000 per year in North America and Western Europe. Bonuses average a meaty $22,000. That tops financial services and banking functions, and consulting and professional services salaries.
Still, MBAs often enter the pharma sector with hopes of consulting. This infuriates some companies. “I recruit international MBAs [and] candidates often are reluctant to share vital information about their personal and career objectives,” says Neil Currie from J&J.
“We waste their time and ours going through several interviews on campus and on site [and] make offers only to discover that they want to work in consulting after all.”
It is thought the big healthcare companies have demanded more MBA hires for long-term careers. With impressive revenues, it is not hard to see why.
J&J’s pharma business reported sales growth of nearly 11 per cent last year. It accounts for 56 per cent of the company’s pre-tax profit.
Oncology was the pick of the bunch. The firm recorded sales growth of 43.5 per cent in 2013, helped hugely by Zytiga nearly doubling to $1.7 billion in the same year, up from $961 million in 2012.
The largest franchise, immunology, saw sales rise by 16.7 per cent, as Simponi and Stelara increased sales by 53.5 per cent and 46.7 per cent respectively.
Meanwhile, Imbruvica, a recently approved drug that treats leukaemia, holds more pharma promise for J&J. Peak sales estimates are at about $6 billion. Invokana, a type 2 diabetes treatment which was approved in March last year, has similarly weighty forecasts. Analysts predict sales could peak at $1 billion.
As fears ease in the post-recession decade, most business schools are optimistic about the pharma sector. MBAs share the enthusiasm.
“People have more expectation from you if you have an MBA and it is great to leverage that,” says Bodi, who was recently promoted to regional marketing coordination executive.
“The challenge would be not letting down those expectations. I would say experience comes first, but the MBA is a bonus.”
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Duke University Fuqua School of Business
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