High Demand for Chief Medical Officers in Biotech Requires Smart Hiring
One of the recent pinch-points of biotech hiring has been Chief Medical Officers. The growth in biotech investing over the past decade has undoubtedly contributed to the increasing need for these senior leaders, as more companies approach or move through the clinical trial stages. Innovation in many different therapeutic categories, and the emergence of new complex modalities, is contributing to a growing demand for clinical and medical expertise in the biotech industry. Furthermore, the capital markets have been highly receptive to supporting biotech IPOs and provide the financial resources necessary to fund the clinical ambitions of companies, boosting the sector’s prospects.
Throughout most biotech clusters in the Western economies, this has led directly to very high demand for senior clinical experts, far outstripping a consistent and manageable supply. The bulk of this demand has come from biotech companies at either a pre-clinical or clinical stage who identify how crucial it can be to the viability of the company to have high-level clinical and medical leadership steering R&D efforts.
The impact of Covid-19 in early 2020 may cause many biotech and pharma companies to adjust their clinical plans over the 2020/21 period, and broader economic and social implications could also result in the loosening of the talent supply. Although, during the peak of the financial crisis of 2007/8, the lack of willingness by many well-positioned executives to consider changing jobs, led to a general lack of movement and temporary tightening of the talent supply. Even if we ultimately see some loosening, the ongoing servicing of Chief Medical Officer requirements will almost certainly remain challenging.
Understanding the role of the Chief Medical Officer:
The appointment of a Chief Medical Officer is something companies have chosen to do earlier in the development cycle. Investors, boards and CEOs; having learnt lessons during past biotech investment cycles; have collectively acted to introduce clinical and medical leadership earlier than in the past. Some reasons for this earlier recruitment have been due to the external environment, with more initial consideration for regulatory and payer requirements now critical to the drug development process. Companies need to be very clear about the drug they wish to develop, the disease or indication they want to treat, and the patients they want to help. Many of these critical strategy questions must be answered early, and so appointments have reflected this adjusted timeline.
Companies have adapted to many of the external market changes, such as regulatory and reimbursement. Still, they have also needed to design their organisations to reflect the right organisational structure for the business strategy. A decade or so ago, the industry was focused on operationally lean, often virtual, drug development. Most companies also preferred to find pharma partners who could deploy tremendous resources that would take on the development from Phase II and manage later and larger-scale trials. As capital flowed into the sector, particularly to companies wishing to tackle diseases with smaller patient populations, companies have been increasingly encouraged to push ahead with programs themselves, targeting later value opportunities, if not pursuing the ultimate goal of commercialisation.
The changing external business environment and the shifting internal operational needs, when combined, have reshaped the associated responsibilities of the Chief Medical Officer in a biotech company. Consequently, it has altered this crucial leadership position, adding specificity and complexity to the requisite skills and experiences at a time where the demand side has grown tremendously. This positive effect has led to an incredibly challenging hiring environment for CMOs, often a crucial appointment.
It is the intersection of the external and internal responsibilities that often determine how to position the CMO in the company. In some biotech companies, they elect to adopt a structure in which the CMO becomes a very notable figurehead for the company, representing them in the external market with key stakeholders, including KOLs and patient organisations. In such a scenario, a CMO will hold limited responsibility for the operations of the company and for leading people. This external-facing and strategic CMO role often situate it separately from the development operations. In such cases, companies often bring other leaders into the company to fulfil these operational mandates.
This bifurcation of the two principal functions of the CMO, clinical development and medical, are at the heart of the other two dominant CMO structures in biotech. The most prominent structure in biotech is where the CMO is the de-facto leader of the development organisation. In this context, the CMO assumes responsibility for most of the internal and external activities across both clinical development and medical. Such an appointment often requires a CMO who can bridge the many complex challenges that exist from early clinical through to market; should the company be successful in reaching these later stages. Relative to other functional leads, this demands a leader who can build and manage the broadest set of functions. Such a requirement can impose considerable recruiting difficulties.
Dividing Up the Organisation
The third scenario is where the Chief Medical Officer does not assume responsibility for the development activities but instead is charged with leadership of the medical organisation, including drug safety, regulatory, medical affairs and quality. This CMO has the external engagement responsibility that we discussed in the first scenario, and the leadership and operational role too; only here weighted more towards medical. The CMO, in this case, is usually situated in the R&D organisation, commonly alongside a development leader, sometimes reporting to an R&D Head, or the CEO.
It is too simplistic to suggest that any of the three approaches discussed here is the best for biotech companies. There are many reasons why a company may choose to opt for one of these models relative to their science, technology and business model. Each approach brings relative complications in the context of hiring and the ultimate success of the appointed CMO.
Looking for Leaders
One of the key obstacles with appointing a CMO in a biotech is ensuring you’re acquiring the managerial experience to lead the diverse set of skills and experience that will form the organisation to be managed. In small and early stage biotechs, where the CMO is entrusted with all the usual functions, everything from translational medicine to medical affairs, it can include 60-70% of the internal headcount of the organisation. Companies, therefore, require CMOs with a capacity to oversee and successfully lead multidisciplinary teams that are core to the long-term functioning of the company, and heavily contribute to the culture of the company.
Identifying such leaders, with the requisite competencies to build and manage successful teams is not a trivial task in an otherwise competitive market. Strong leaders who have shown themselves adept at organisation building are likely to garner attention from investors and boards as candidates for CEO roles, EIR positions and the like, meaning they have other career paths open to them beyond CMO. Those candidates whose ambitions are more narrowly set to CMO-type roles must show themselves able to bring emotional intelligence (EQ) and the people qualities necessary. It is easy for a company to prioritise the deep clinical and medical qualifications a candidate brings over people skills, but many times this results in an unsuccessful tenure.
With a distinct shortage of CMO-level candidates, companies are encouraged to engage in promotional hiring. However, elevating someone from the role of Medical Director to CMO prematurely can lead to the appointed person being deficient in many aspects of leadership. Careful thought needs to be applied to such an appointment.
Adding Scientific and Technical Expertise
Adding a CMO to the company’s leadership indicates the desire to bring specific clinical or medical expertise to the company to help drive early or full development programs. In preparing to do this, the discussion often centres on the very scientific, clinical or technological knowledge that would be deemed valuable.
In this situation, it is occasionally obvious the experience that is needed. However, with many new modalities and therapeutic approaches, the value of experience from other domains can be incredibly useful to many companies. For example, cancer immunotherapy is an area where CMOs with experience in other disciplines became more applicable. Instead of hiring oncologists or haematologists, companies pursued candidates with experience in immunology, cell therapy, or transplantation.
However, this diversification of the candidate pool can be very challenging in a recruiting context. Some thought needs to go into where the highest priorities lie. For instance, a company developing a gene therapy program for haemophilia may wish to appoint a CMO to acquire specific expertise in gene therapy. When going into the market to recruit, they find that many of the existing candidates are expert in other therapeutic areas, like ophthalmology, where there have been many gene therapy companies. They then have to decide if they prioritise the gene therapy experience, or go back to the market and find a haematologist. It is worth noting here that even though the company looking to hire the CMO may be incredibly bullish about their programs and likely success, an ophthalmologist of 30 years is unlikely to want to move into a whole new disease category. And so this becomes a repetitive outcome as the company reaches more people of a similar background.
Of course, not all companies are focusing in on a single disease, and therefore, require a CMO who can contribute across many programs. However, this calibration of just how important the particular knowledge of a drug target, a disease, the modality, or even the patient population, truly is, becomes a defining ingredient to a successful hiring strategy.
Varied Operational Experience and Agility
The operational preferences of CMO candidates often show up in their experience. If you consider a function like clinical operations, for example, CMOs often express very fixed ideas about whether this function should be in-house or outsourced. Operational inflexibility is normally a negative attribute, and in a leader who has such a considerable influence over multiple functions, this can be very detrimental.
Small and growing biotechs must retain their operational agility. For them to endure, the leadership also needs to have this mindset. Companies with highly adaptable leaders who can scale-back or shift direction, often win out in the changing fortunes of biotech. A CMO must show this too, and evidence of this in prior operating environments is an important signal to pay attention to during the hiring process.
Brief Tenures and the Compound Effect
In tight talent markets, the demand-side opportunity is abundant, and the supply-side gets the pick of opportunities. A consequence of this over time is that candidates are competed for very aggressively, with better jobs, better compensation and better prospects. This fierce competition, alongside other market factors, drives the frequency with which people move from job to job. Average tenures get pushed down, and the ‘in-job’ experience diminishes.
In the CMO job market, this effect is currently highly visible. Candidates, either active or passive, have average tenures that have come right down. As a one-off, a candidate with a tenure of somewhere between twelve and eighteen months is no big issue. However, if you identify this repeatedly over a sustained period, this provokes concern. Historically, this concern would have centred on the ‘loyalty’ to an employer. Today though, the concern, particularly in the case of a CMO, is what have they been truly able to accomplish in the position, and what is the compounded effect over several roles with similar tenures. Biotech is a slow and complicated business, and a year is not much time as a CMO to accomplish much. So this issue of tenure will continue to be an essential aspect of hiring to pay attention to longer-term.
Avoiding Common Mistakes
In markets where talent is tight, companies, and those charged with hiring, tend to find themselves in the unenviable position of beginning to make compromises about the person they intend to hire. The compromise begins when the mental process of defining the requirement meets the stark reality of the marketplace. In such circumstances, and depending on the severity of the need, hiring companies begin to chip away at the description, looking for areas where they can concede to the marketplace. Such conditions tend to introduce issues into the hiring process and quite often results in hires that do not meet the requisite expectation. Below we look at three areas where this commonly occurs:
- 1. There are very many senior medical leaders who are incredibly valuable to organisations of different sizes and growth trajectories. A common error is that a company hires a CMO who sees their role as more ‘advisory’ or ‘consultative’. They envisage spending their time engaging with key opinion leaders and external representatives, as well as supporting the company with high-level strategic guidance. In most small and medium biotechs, this is a luxury that can’t be accommodated. Smaller companies need people who can and are willing to roll up their sleeves and get involved with the more operational elements. As covered earlier, the structure has some bearing on this, however, most biotech companies need this operational attitude. In terms of recruiting barriers, this can be an area of early compromise, which almost always proves negative.
- 2. Communication, as with most jobs, is a vital part of the CMOs role. A CMO must be very adept at communicating the company’s message to a broad set of stakeholders, and must do so in a relevant manner. Prior experience as a CMO may provide evidence of such capabilities; however, many companies are appointing CMOs who come to the role for the first time, either from more junior posts or without the experience of the full stakeholder engagement. In particular, investor communication is a vital function of many CMO positions, and is also very demanding for many reasons. Companies are inclined to compromise on facets of the communication skill set, choosing to narrow the essential requirement to communicate with the community of KOLs and clinicians. This reduction insufficiently acknowledges the underlying importance of fully developed communication skills that are a critical success factor of CMOs.
- 3. By the time most candidates reach CMO level these days, they will have acquired quite considerable experience in international markets and global working. But not all. And this can often be an area that offers some prospect of compromise. Companies struggling to hire can relax their requirements on international experience, electing to consider those candidates with domestic market experience. Although it can seem relatively straight forward to adapt a person’s experience to a more international setting, the reality is often far more problematic. Being able to set-up, run and manage clinical programs in multiple countries requires a certain level of international know-how. The same is true of many of the other responsibilities assigned to the CMO, such as building and managing international or global teams. These geographic dimensions mean the task gets all the more difficult. If the company needs a CMO with international or global experience, then this is something any appointee should bring to the company.
Ensure good oversight from the board:
It is incredibly valuable to have a competent drug development expert on the leadership of a biotech company. Critically though, this person must receive sufficient challenge from others, both within the management and also at the board. At a time when the company’s critical objective is driving the clinical development process, the CMO can become a very dominant voice; influencing critical decisions about many aspects of the development plans, and the related financial commitments of the company.
Companies which fail to introduce adequate oversight from the board of directors, primarily because of a lack of the right expertise, can find themselves solely reliant on the prevailing wisdom of the CMO. This dominance can lead to sub-optimal outcomes. Therefore, board composition should be planned to ensure that the necessary expertise resides on the board as to be able to have balanced and constructive discussions between the board and leadership (inc. CMO) about clinical and medical matters. If the board composition does not allow for this, then the board should set up a way for this rigorous oversight to be introduced somehow.
The need for Chief Medical Officers represents a test for the industry and individual companies. The sector, which is maturing rapidly with more companies reaching the clinic, need these leaders on the management team. With no dramatic shift in the availability of such candidates, more creative recruiting approaches will need to employed to reach qualified candidates. How candidates are assessed will also need to be thought about, as to ensure the range of skills, experience and competencies are satisfied. As we enter the summer (2020), there are many severe operational issues to confront too, which will impose complication on the search process, but also the assessment and employment of CMOs. When the dust settles on this pandemic, we can be confident that hiring CMOs is still going to be a difficult task, requiring a planned and well-executed strategy.
Liftstream is an executive and board level search firm exclusively serving the global life sciences sector.