​The CRO and CDMO Market: Challenges & Opportunities

The CRO and CDMO market is a dynamic and fast-growing segment of the biopharmaceutical industry, with a projected compound annual growth rate (CAGR) of 8.5% from 2020 to 2027, reaching a value of $278.4 billion by 2027, according to a report by Grand View Research. The main drivers of this growth are the increasing demand for outsourcing services from the biopharmaceutical companies, the rising complexity and diversity of biopharmaceutical products, the emergence of new technologies and platforms, and the need for cost reduction and efficiency improvement.

However, the CRO and CDMO market also faces challenges and risks, such as intense competition and price pressure, volatility and uncertainty of demand, and central to this article, shortage and turnover of talent.

Talent is particularly critical, as the success and reputation of the CRO and CDMO companies depend largely on the quality and performance of their human capital. Therefore, attracting and retaining talent is a strategic priority and a competitive advantage for the CRO and CDMO companies.

The Importance of Offering Competitive and Attractive Remuneration Packages

A remuneration package is the combination of financial and non-financial rewards that an employer offers to an employee in exchange for their work and contribution. A remuneration package can include various elements, such as base salary, bonuses, equity, pension, health insurance, life insurance, disability insurance, relocation support, education support, childcare support, holiday allowances, flexible hours, hybrid working, career development opportunities, recognition programs, and wellness programs.

This package is not only a way to compensate and motivate employees, but also a way to communicate and reinforce the employer's brand, values, and culture. A remuneration package can reflect the employer's commitment to diversity, inclusion, innovation, sustainability, and social responsibility, as well as the employer's recognition of the employee's skills, experience, performance, and potential.

Offering a competitive and attractive remuneration package is essential for attracting and retaining talent in the CRO and CDMO market, especially in a context where basic salaries are slowly improving but are still not on par with the big pharma or biotech companies. According to a survey by Kelly Services, 47% of the life sciences professionals in the UK said that salary was the most important factor when considering a new job, followed by career progression (18%), work-life balance (15%), and benefits (10%). However, when asked about the reasons for leaving their previous job, 35% of the respondents cited lack of career progression, 24% cited lack of recognition, and 19% cited lack of work-life balance, indicating that these factors are also crucial for employee retention.

Therefore, CRO and CDMO companies need to look at the whole package, not just the financials, and offer remuneration packages that not only match or exceed the market rates, but also address the diverse and evolving needs and preferences of the candidates and employees. By doing so, they can enhance their employer value proposition, differentiate themselves from the competition, and increase their talent pool and retention rate (my colleague Harry Henson recently published an excellent piece on the importance of Employer Brand in the life science vendor space – go and check it out if you haven’t seen it yet!).

The Different Types of Benefits that Candidates and Employees Value

The benefits that candidates and employees value can vary depending on their personal and professional circumstances, goals, and preferences. However, some general trends and patterns can be observed, based on the research and surveys conducted by various sources, such as Kelly Services, Hays, Randstad, and Glassdoor. Some of the most common and valued types of benefits in the industry are:

• Financial benefits: These include bonuses, equity, pension, and relocation support. Bonuses are a way to reward and incentivize employees for their performance and contribution, as well as to align their interests with the business objectives and outcomes. Relocation support is often overlooked but where an organisation can support it, allows employees to experience new environments and expand their skill set to both the employee and organisation's advantage.

• Non-financial benefits: These include hybrid working, flexible hours, and allowances. Hybrid working is very much a hot topic with the market turning back from the initial post-pandemic stance, often counter to employees’ desires. Likewise, flexible hours are something that many employees appreciate alongside hybrid work.

• Career development benefits: This includes training programs and career progression opportunities. Education and training support demonstrate the employer's investment and commitment to the employee's learning and growth. as well as improving their performance and competence. Career progression opportunities demonstrate to employees the possibility and pathway to advance in their career, either vertically or horizontally, within the organisation, as well as to demonstrate the employer's recognition and reward for the employee's potential and ambition.

• Recognition and wellness benefits: These include recognition programs, wellness programs, and social events. These are a way to offer employees the acknowledgement and appreciation for their achievements and contributions, either individually or as a team, as well as to demonstrate the employer's culture and value of recognition and gratitude. Wellness programs are increasingly on the rise in this new world of hybrid work.

The Best Practices for Designing and Communicating Remuneration Packages

Designing and communicating remuneration packages is not a one-size-fits-all process, but rather a customized and tailored one, that takes into account the specific needs and preferences of the candidates and employees, as well as the goals and resources of the employer. However, some general best practices can be followed, based on the research and recommendations by CIPD. Some of the most common and effective best practices for designing and communicating remuneration packages are as follows:

• Conduct a market analysis and benchmarking: This involves collecting and analysing data on the current and projected trends and rates of the remuneration packages offered by the competitors and the industry, as well as the expectations and preferences of the candidates and employees. This can help the employer to determine the appropriate and competitive level and mix of the remuneration package elements, as well as to identify the gaps and opportunities for improvement and differentiation.

• Align the remuneration package with the business strategy and culture: This involves ensuring that the remuneration package reflects and supports the vision, mission, values, and objectives of the business, as well as the culture and identity of the employer. This can help the employer to create and communicate a consistent and coherent employer value proposition, as well as to attract and retain talent that is aligned and engaged with the business.

• Offer choice and flexibility: This involves providing candidates and employees with the option and opportunity to customize and adjust their remuneration package according to their personal and professional needs and preferences, within the limits and parameters set by the employer. This can help the employer to cater to the diverse and evolving needs and preferences of the candidates and employees, as well as to increase their satisfaction and loyalty.

• Communicate clearly and transparently: This involves providing candidates and employees with clear and accurate information and explanation about the remuneration package elements, criteria, and processes, as well as the rationale and benefits behind them. This can help the employer to establish and maintain trust and credibility with the candidates and employees, as well as to address any questions, concerns, or feedback that they may have.

• Review and update regularly: This involves monitoring and evaluating the effectiveness and impact of the remuneration package on the attraction, retention, performance, and engagement of the talent, as well as the alignment and compatibility with the business goals and resources. This can help the employer to identify and implement any necessary or desirable changes or improvements to the remuneration package, as well as to keep up with the market and industry trends and standards.

Conclusion

Businesses need to take the whole package seriously when developing talent attraction and retention plans. Failing to put together a competitive package will decrease competitiveness in bringing in the best talent and allow greater possibilities for current employees to have their heads turned elsewhere. This ends up costing the business financially and potentially in terms of employer brand. To have a strong benefits package, it is not necessary to have everything; it is more important to have a several great elements that are consistently communicated and reviewed. Here at RBW, we are able to provide salary and benefits market information to help guide this strategy. Do please get in touch if you would be interested in discussing further.