"Even Willing to Take a Pay Cut": PhDs Packing Up... What's Happening at Pharmaceutical Companies [Aftermath of Drug Price Reform] ①

Widening Project Uncertainty Disrupts Research Sites
Drug Price Reform Raises Profitability Concerns for Small and Mid-Sized Firms

Editor's Note
Confusion is mounting in the pharmaceutical industry following the government’s announcement of its drug pricing reform plan. Small and mid-sized pharmaceutical companies, which rely heavily on generics, have begun to halt research and development (R&D) projects or completely reconsider their investment plans, leading to a noticeable exodus of related personnel. This runs counter to the reform’s stated goal of shifting away from excessive competition in the number of products and dependence on contract manufacturing; rather, concerns are rising that the industry’s fundamental competitiveness may be undermined. This article examines how the industry is responding to the upcoming drug price reforms and the challenges that lie ahead.

① Shaken Laboratories, Departing Talent

② Pharmaceutical Companies in Crisis, Struggling with “Product Portfolio Diet”

③ Vague Incentive Standards Disrupt Business Planning

Dr. Jeong, who had been in charge of generic drug R&D at Pharmaceutical Company A for eight years, recently submitted his resignation. The development project he was involved in came to a halt during the company’s structural reorganization. After the government’s drug pricing reform was announced, the company said it needed to reassess profitability and did not set a timeline for resuming the project. The department is effectively being dismantled.

Mid-sized Pharmaceutical Company B had operated a specialized team for new drug development, but recently began restructuring its business by downsizing some projects. This move was prompted by reduced cash flow and growing uncertainty about profitability. As a result, some research personnel with doctoral or pharmacist backgrounds are reportedly deciding to resign or considering moves to other companies.

Project Stoppages Drive Out R&D Talent

With reforms to generic drug pricing on the horizon, the outflow of R&D personnel from small and mid-sized pharmaceutical companies is becoming a reality. Even after the reform plan was finalized, ongoing uncertainty about detailed criteria and implementation timelines has led many companies to cut back on development projects or delay new hiring.

As of July 1, according to the pharmaceutical industry, some small and mid-sized pharmaceutical companies are reconsidering their R&D projects and personnel plans for the second half of the year. Generic drug development projects deemed unprofitable are being delayed for approval or discontinued, and new research staff hiring is being approached with greater caution. An industry insider said, “Many companies are reevaluating whether their product lines will remain profitable after the drug price reform,” adding, “As projects are reduced, R&D staff on those teams naturally start considering other opportunities.”

The Ministry of Health and Welfare recently finalized a reform plan to reduce the drug price calculation rate for generics and off-patent drugs from the current 53.55% to 45%. In contrast, innovative pharmaceutical companies and quasi-innovative pharmaceutical companies will be eligible for price premiums of up to 60% and 50%, respectively. The intention is to reward companies with R&D capabilities and quality competitiveness, rather than those focused primarily on generic products.

While the industry generally agrees with this direction, there are concerns about uncertainty during the transition. For small and mid-sized pharmaceutical companies that have funded R&D with revenue from generics, a decrease in drug prices could directly worsen cash flow.

MFDS Review Jobs Emerge as New Career Path

The career paths of research personnel are also changing. As project continuity at companies becomes less certain, some are looking to not only competitors in the industry but also to stable organizations or positions where they can gain experience in regulatory approval and review. One example is the Ministry of Food and Drug Safety (MFDS) review staff. This year, MFDS increased the number of reviewers in the bio-health field from 369 to 564 as part of a medical product approval and review innovation plan. In January, MFDS conducted its largest-ever career recruitment since its establishment, hiring for various positions such as industrial researchers, health researchers, and specialized contract positions. The competition ratio was about 12 to 1, significantly higher than typical career recruitments.

With the stability of private pharmaceutical company projects in question and MFDS expanding its review staff, MFDS is emerging as a new career option for some researchers. Until now, MFDS reviewer positions have not been highly sought after by private sector R&D personnel, due to perceptions of lower compensation and higher workload. However, there is a growing view that even if salaries are lower initially, gaining experience in approval and review at MFDS can provide a premium when moving into roles in pharmaceutical approvals, development strategy, clinical development, or regulatory consulting in the future.

Another industry source said, “Although MFDS reviewer jobs are respected for their expertise, they were not popular among researchers due to the working conditions. However, when the future of company projects becomes uncertain, the equation changes. Many people now recognize the value of stable public sector experience, which can later be leveraged when returning to the private sector.”

This content was produced with the assistance of AI translation services.