Pharma companies in Japan cross cultural boundaries
After the Great East Japan Earthquake of 2011, I asked a European Pharmaceutical executive about how quickly the company was able to respond to the crisis. After a long pause and deep sigh, the executive described how his company would only act after observing Astellas or Takeda had taken the lead. He said, “Philip, you know that many foreign pharma companies has more in common with Eisai or Daiichi then it does with other subsidiaries in Europe or America.”I have been recruiting executives in Japan for 12 years, and my observations have been that many multinational pharmaceutical companies have allowed their Japan headquarters a high level of autonomy. Furthermore, the market size, seven-year drug lag (delay before a new agent is allowed into the marketplace), culture, language, and highly educated workforce have led to a high degree of self-determination.The subsidiaries of multinational pharmaceutical companies mostly work as per Japanese culture and practices. For example, many Pfizer employees joined the company (or one of its acquired companies) straight out of university and retired at the age of 60. In this respect, Pfizer’s paternal instincts were much the same as those of Mitsubishi, Sumitomo, or Mitsui, which were to look after the employees from the cradle of their first jobs to retirement.
However, changes in the labor market have gathered pace in recent years, and the number of mergers and acquisitions by both foreign and domestic companies has forced companies to restructure and increase the number of part-time staff and outsource key pharmaceutical functions such as clinical trials and data management to clinical research organizations. As such, companies can no longer guarantee lifelong employment. In fact, the majority of major pharmaceutical companies now offer early retirement and redundancy programs.
Globalization, technological change, and The International Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH — a project that brings together the regulatory authorities of Europe, Japan, and the United States and experts from the pharmaceutical industry in these three regions to discuss scientific and technical aspects of pharmaceutical product registration) has meant that Japan is no longer an isolated market but an integrated member of the global corporate family of companies. Accordingly, simultaneous global clinical trials and product launches are now common.
As pharmaceutical companies in Japan slowly integrate with the rest of the world, the demand for bilingual talent has increased. Japanese domestic companies such as Takeda, Eisai, and Daiichi Sankyo have all acquired non-Japanese companies and are now competing with foreign multinationals for the same bilingual talent pool. The demand for talent is strong, and the supply side is getting squeezed by Japan’s shrinking labor market. As noted by the Statistics Bureau and the Director-General for Policy Planning of Japan, “The labor force is expected to shrink in the long run as the falling birth rate and the aging population change the population composition.”
These changes have also led to changes in compensation. Traditionally, companies have systems in place for periodic salary increases. The base pay is increased based on the number of years of service and seniority. Salary increase based on seniority is general labor practice and is deeply embedded in the consciousness of workers in Japan.
However, Morunda observed that foreign companies are now looking to hire the best and the brightest within the market and are willing to cross cultural boundaries and promote high-potential employees into line manager roles. We now observe that the top 5% of employees in the 35–40 cohort earn in excess of 18 million yen (200,000 USD). This level of salary was once only earned by employees in their mid to late 40’s.
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