By Jack Lister, Executive Search ConsultantJanuary 27, 2022
The Impact of Market Consolidation on CRO Employees
The area of Contract Research Organisations (CROs) has been undergoing significant consolidation in recent years and while much is speculated on the sector’s increase in sales and market share as a resulting factor, not much is mentioned regarding the people working for those companies.
In the past eight years, the CRO industry has seen Labcorp acquire Covance in 2013 for a reported $6.1bn, the merger of Quintiles and IMS Health to create a market value of approximately $18bn as of the time and more recently, ICON plc closed the $12bn acquisition of PRA Health Sciences.
The business benefits for these mergers and acquisitions are clear to see, providing companies with increased scalability, potential for additional therapeutic expertise and service capabilities as well as allowing sponsors to access all of the services that they require with one CRO partner. On the other hand, one of the debated drawbacks is the impact that these decisions can have on the combined workforce of such large companies.
When two leading companies merge, arguably the most difficult part is trying to work out what to do with the labour force that has amalgamated. At this stage, one of the key long-term priorities is to begin the integration of the two companies which can take years to successfully complete.
During this time, some employees can thrive under the new conditions provided by the merger or acquisition. They are able to have new experiences and opportunities, such as new methods of working, promotion opportunities and other advantages which could benefit them later down the line.
In a sector where employee turnover and those nearing retirement age is one of the highest out of most professional industries, the emphasis on the existing workforce is sometimes neglected in favour of more short-term arrangements and targets that need to be met. This is evident as recent figures suggest that the CRO staff turnover has not reduced much since pre-pandemic levels of 24%, with the November 2020 figure stating that the measurement was around 21%.
The integration of two companies is naturally a confusing time for employees as they are put into a situation where they are left unsure about their current and long-term working arrangements.
Depending on the type and size of companies involved in these deals, professionals may find an acquisition of their company is an opportunity to reflect on the experience that they have gained and consider their options. Their track record with a successful CRO is an element that many growing mid-sized and smaller competitors find attractive and invaluable when considering mid to senior level appointments.
This is also the case with other larger, more established organisations in that employing staff who have already gained experience working for a similar large market competitor could be considered less of a risk than employing those not fortunate enough to have had that opportunity. The familiarity of such well-known companies can also certainly appeal to some candidates who are considering their options elsewhere.
Looking from the organisation’s perspective, the merging companies could also see their own attempts to acquire new talent benefit significantly. They may now have the enhanced facilities to offer a more appealing working environment, career prospects and compensation packages. In some instances, they may see the merger as the opportunity to expand their workforce, bolster expertise in certain areas and capitalise on the newfound ability to be able to attract some of the strongest candidates in the market.
It’s clear that CRO consolidation usually benefits the company with an increase in market share and sales, as well as an expansion in its capabilities to offer its sponsors. An acquisition can also benefit individual employees from their own personal career development standpoint as they begin to learn how to handle work life in a different type of company and expand their skillset as they adapt to their new environment. We’re in a period of consolidation that is providing seemingly endless market opportunities to both CRO employers and employees.
< Back to Blog