Mergers and acquisition activity is exploding in the pharmaceutical industry. In the first half of 2015, the value of completed M&A deals in pharma reached $221 billion, 3 times what it was during the same time in 2014, according to a report released in July by consulting firm KPMG. The top 10 deals alone this year totaled $56.4 billion.
This boom in M&A activity is being driven by a number of industry factors.
What’s going on with M&A
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Pharmaceutical companies are expected to lose $44 billion in 2015 in sales due to patent expirations, according to the KPMG report. To make up for these losses, companies are investing more in M&A to diversify their pipelines and acquire new drugs.
Many pharmaceutical executives believe that acquisitions are the best way to keep revenues growing as fast as their investors expect. After all, the cost to acquire the next big drug is often cheaper than it is to develop breakthrough drugs in-house.
But what does all this activity mean for pharmaceutical sales representatives? What does it mean for the job market?
Why reps are worried
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Mergers and acquisitions notoriously lead to layoffs and job cuts, leaving many pharma reps worried about their careers and future job prospects.
There is already stiff competition in pharmaceutical sales. Pharmaceutical sales jobs offer high salaries, and attractive perks and benefits that draw many professionals to the field. In fact, a salary report conducted by my company, MedReps, this year found that pharmaceutical sales reps earn an average of $116,334 each year.
Factor in the shrinking number of pharmaceutical companies and the high potential for layoffs, and job security in the future of the industry seems impossible. But in reality, reps shouldn’t be worried about the future of pharmaceutical sales jobs.
Why pharmaceutical sales jobs aren’t in danger
M&A activity may cause some pharmaceutical sales reps to panic, but there’s no need — M&A is actually driving an increase in industry jobs, according to a report published by EP Vantage in August.
The report looked at the effect M&A activity had on jobs in the medtech industry in 2014, and the results were surprisingly positive. For example, after acquiring Covidien, Medtronic grew their employees to more than 90,000 people on their payroll, at the end of the 2014 fiscal year. Overall, the company grew by 88 percent from 2013 to 2014. But even discounting the jobs added from Covidien, Medtronic employees grew by 7 percent in that time.
Medtronic wasn’t the only company to grow their employee base from M&A — none of the top 15 medtech companies by market capitalization saw a net decrease in staff numbers last year.
Although the report highlights medtech jobs, not pharmaceutical sales jobs, M&A activity may have similar results on jobs in pharma. Larger pharmaceutical companies will require a larger staff and can offer more career growth opportunities. With more drugs in their pipelines, companies will need more pharmaceutical sales staff to represent them.
Pharmaceutical sales reps are directly responsible for growing companies, connecting with new clients, and maintaining existing ones. They are a critical part of pharmaceutical companies and as companies grow, will only become more important.
What pharma sales reps can do
Although most pharmaceutical sales jobs are likely not in danger, M&A activity will cause companies to change, and reps need to adapt.
The best pharmaceutical sales reps will find ways to be successful in any climate. Staying on top of industry trends, being open to learn and adopt new strategies, and being aware of company changes can keep sales reps performing at their best, making them valuable to their employers no matter the circumstances.
What do you think? How are mergers and acquisitions impacting pharmaceutical sales jobs?
Karyn Mullins is the President of MedReps.com, a job board which gives members access to the most sought after medical sales jobs and pharmaceutical sales jobs on the Web.
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