High attrition plagues Indian pharma sector

After information technology (IT), the pharmaceuticals industry is grappling with the highest level of attrition. The fast growing knowledge-based sector suffers an annual attrition rate of 30 to 35 per cent, according to a recent survey by Interlink Marketing Consultancy.

The survey points out that the sector's high churn other than the natural rate of attrition is mainly due to poaching, burnout, high stress at work and inadequate payment.

Globally, the rate of attrition in pharma is only 10 to 12 per cent, says the IBS report. The research reveals that the pharma industry annually experiences an employee turnover of 30 to 40 per cent at the field level and 8 to 10 per cent at the managerial level.

Disaffected employees cite five main reasons poor management, lack of appreciation, support, opportunity for advancement, inadequate compensation and ethical issues, for leaving their jobs.

According to K Vani Shetty, associate consultant at Interlink, the pharmaceuticals industry, though poised for changes, is yet to recognise the importance of keeping its employees happy and engaging them to leverage the competitive strength in the global context.

"Even though the potential to be competitive in the global arena exists in this sector, companies are yet to move strategically as regards their human and financial resources in order to take advantage of the available opportunities," she says.

Interlink surveyed a sample of 15 companies in the small, medium and large segments in the Indian pharma sector.

The general feedback from the industry indicated that while human resource is increasingly becoming a strategic business function in many companies, particularly in the SME sector, man management skills often do not percolate down to the first-level frontline managers.

"For example, the medical representatives look up to their area supervisors not just as immediate supervisors but also as guides and counsellors. Lot of medical representatives change jobs in the initial period of their career owing to inadequate skills of frontline managers in the field," adds Vani.

Sources from the industry are of the view that as far as marketing and sales areas are concerned, pharma industry is one of the sectors most affected by a high attrition rate in India. "It has also been observed that the workforce feels that it is not adequately paid," they said.

The market in India is highly fragmented, as there are more than 10,000 licensed firms with a total annual turnover of Rs 54,000 crore. Out of this, only 300 companies are in the organised sector.

In many small-scale units, including outsourcing companies, the workers are not paid adequately. Hence they tend to migrate to better-paying companies after gaining experience of a year or two," they added.

However, the sources from major players in the Indian pharmaceuticals industry, like Ranbaxy Laboratories and Sun Pharma, said that the attrition rate has been comparatively less in the last few years, especially on the marketing and manufacturing fronts, though the R&D front is still an area of concern for this matter.

But, the industry statistics show that the attrition rate in many other big companies is still higher in the marketing segment.

A senior executive at Ranbaxy Laboratories said that the attrition rate could be less than 10 per cent in the company, as its work culture, compensation, growth opportunities, including the scope of working at international locations, have really helped in retaining people.

While a spokesperson for another large pharma house, Sun Pharma, said, "For marketing, at the representative level, the attrition rate would be around 12 per cent. Though there is increased competition for resources from other industries, good working atmosphere, better opportunities within the company, career planning, international opportunities for good performers, strong meritocracy, regular and timely rewards have helped us to reduce attrition rate."

But, says an industry analyst that the attrition rate in the R&D segment is very high, as the highly skilled work area has severe dearth of experienced professionals and, at the same time, new opportunities are tremendous in the sector, as globalisation on the R&D front and the increased outsourcing opportunities in India have created a sudden demand for skilled research people.

The other industry-specific issue is the ethical practices. The pharma companies have to comply with statutory requirements of quality assurance, like good manufacturing practices (GMP), Good Laboratory Practices (GLP) and voluntary codes of marketing practices.

The study shows that a large number of people, the old-generation employees, in particular, who find it difficult to adhere to ethical standards, leave the organisation.