[The Editors' Verdict] Pharmaceutical Executives Circulating Between Companies

Hanmi Pharmaceutical frequently changes its executives. For about the past 10 years, it has been known in the pharmaceutical industry as a company that hires often and lets go quickly. There was even a thriving market for headhunters specializing in former Hanmi Pharmaceutical executives. A former executive recruited during that time said, "After a year passed, I noticed that the existing executives were gone, and a line of new executives followed me, making me feel like the senior member."

Daewoong Pharmaceutical experiences many internal executive transfers. A former senior official of the company explained that it has long been a personnel practice to consider the late 40s as the prime for working executives, and to move them to back-office roles once they reach their 50s. Many former Daewoong Pharmaceutical executives have stepped down from practical roles and moved to operational positions at other pharmaceutical companies.

Not only these two companies but the entire pharmaceutical and bio industry frequently sees executive-level reshuffles. Even last year, in the research and development sector, several executives from top pharmaceutical companies such as Yuhan Corporation, Chong Kun Dang, Boryung, and LG Chem either moved to other companies or joined from other firms. Many companies redrew their organizational charts for the departments when recruiting new leaders.

Flexible management of organizations and personnel enables young and swift management. Hanmi Pharmaceutical significantly increased applicants by utilizing YouTube for new employee recruitment. Daewoong Pharmaceutical has seen effective marketing results by collaborating with fashion companies to release goods such as bear T-shirts and golf club covers.

However, there are side effects to the trend of not retaining people for long. At a pharmaceutical company sued by a competitor over technology-related issues, when the technology head was treated inappropriately by management, they immediately resigned, saying "I won't stay long anyway," and moved to the competitor, contributing to the victory in the lawsuit against their former company.

A few years ago, a newly appointed top executive at Hanmi Pharmaceutical wielded a knife on the organization and personnel but left the company shortly afterward. Earlier this year, when a management dispute erupted between Chairman Song Young-sook and President Lim Joo-hyun, mother and daughter, and Presidents Lim Jong-hoon and Lim Jong-yoon, brothers, rumors circulated around the company that whoever wins would return and wield the knife again. The pharmaceutical industry believes that if the brothers who took control of management make balanced personnel decisions based on performance and ability, the company will not be shaken, and the volcano covered by the joint mother-daughter CEO system will not erupt again.

The average tenure of executives at the top 30 listed pharmaceutical and bio companies by sales is only 7.8 years (2022 Financial Supervisory Service). This is less than the average of 9.4 years for the top 200 companies by market capitalization in the same year. The fundamental reason pharmaceutical and bio personnel can circulate within the industry from one company to another is that domestic pharmaceutical companies rely more on generic drugs and imported medicines, which are largely similar, rather than original drugs. Since every company is more or less the same, moving to another company means doing similar work. Therefore, managers, whether executives or employees, fill vacancies more easily by scouting personnel from competitors rather than nurturing their own talent.

Besides the thinness of the professional talent pool itself, the biggest cause of personnel shortages cited by domestic pharmaceutical and bio companies is 'frequent job changes and resignations' (Korea BioPharmaceutical Association survey). They are shooting themselves in the foot. Our company poaches and lets go, so other companies do the same. Relying on generic drugs of similar quality, they cannot resist the temptation to poach and discard personnel. By focusing more on original product development and nurturing the necessary in-house talent over the long term, both the company and the entire industry can grow solidly.