#21 Big Bucks in Pharma/Biotech
degrees, work experiences and money
r/biotech has great insights on biotech industry from people with first-hand experience. Just scrolling through the forum, one can learn a lot about how the industry works (on a macro level), salary differences within and across companies, how management thinks about their company, valuable suggestions from experienced folks to someone starting out in the biotech market and sometimes good memes that hit hard.
u/McChinkerton conducted a survey with a few questions like company type (pharma or biotech), location, position name, position description, salary and their opinion of the company. When I came across this survey, I thought it would be a good idea to pull some insights out systematically to understand some macro trends. I mostly focused on salary and analysed relevant information to understand how the these variables influence salary differences. Here, I only considered base salary because the joining bonus, yearly stock options can be different depending on the company for the same position.
After cleaning the data, there are 1196 participants in this survey and most are from US. There are a few participants from Europe, here I made the assumption their salary entries are in US dollars. Let’s try to understand who is making Big Bucks in pharma and biotech.
Bare Minimum to Luxury
This is a good representation of salaries across the industry — starting from Masters and PhD students to a CEO, the highest position of any industry. Most of the participants are making $100k-$200k per year. The average salary of these ~1200 employees is ~$130k (median = $121,250). There are about three people making more than $400k (their positions are indicated on the figure right lower corner). The only one CEO who participated in the survey is earning $575,000, which I think is a good amount given it is a start-up. Based on my experience, this maybe equal to senior vice-president or global head kind of positions in big pharma.
In the title, I don’t mean “luxury” in it absolute meaning but in relative terms. Compared to someone making a $50k per year, a $300k is indeed a luxury, of course the later comes with a requirement of more work experience (more on this below), different set of responsibilities, much more accountability and stress (not to say early career employees have any less stress).
Geography Matters
Employees in Switzerland are making at least $53,000 (median difference) more compared to those from US. This observation can be confounded by e.g. all participants from Switzerland are more experienced or has an advanced degree, therefore earning higher salaries. So I did a head-to-head comparison. Someone with a bachelors degree and five years of work experience is making $125,000 in Switzerland and $97,000 in US.
Besides this observation, from my personal experience — talking to friends living there, interviewing with companies in Switzerland, the salaries are significantly higher compared to other European countries and US (so are living expenses). If you are thinking of a new country, Switzerland is not a bad place to move to with good wages and very high quality of life. Basel is a hub for big pharma (Novartis, Roche) as well as start-ups. Reflecting on my own career journey so far, it is generally a good idea to consider a place where there are a lot of biotech startups and big companies, a high support for new ideas in the city you want to live or nearby cities, instead of one company having a monopoly on talent.
According to Naval Ravikant, where you choose to live is one of the most important decisions you will ever make. This determines your health, people you meet, who you date and quality of your life.
More Experience — Does It Help?
It’s a no brainer that people with more work experience earn more, with some exceptions. Something interesting here is that correlation between work experience and salary at best is average. In fact, work experience is only explaining ~34% of variance in salary (r-squared from linear modelling). Having just more work experience will help but neither sufficient nor necessary — in fact at five years of experience, one can earn as much as someone with 10-15 years of experience. In the figure above, there is a data point just above $400k (on y-axis) with 5 years of experience (on x-axis), this is impressive. Though I am a bit doubtful there might have been some mistake in entering work experience years in to the survey form. It is not impossible for someone to become a vice president with five years of experience but the combination of such a high salary with relatively low experience is suspicious.
There are a number of reasons why someone’s salary is not increased with respect to their work experience (at least not as much as one would expect). It is impossible to frame questions in a survey to encompass all those reasons. However, the current dataset has additional information like highest degree, company type (private/public/academia).
Does Degree Matter?
Looks like it does. Someone with an MD is earning ~$111,000 more than a PharmD and ~$150,000 more than a PhD. Could it be that MDs are mostly working in big pharma clinical departments where they are much closer to clinical trials (something big companies can afford) and are paid high, while PhDs are distributed in research across different small, medium and big companies? So I went back to the data and checked, all of 9 employees who are MD are working in big pharma. Everything else being equal (e.g. years of work experience, same company, location etc), I do believe this observation will hold true even in bigger sample size.
Should You Get a PhD?
Since having an advanced degree looks like it can impact how much one can earn, let’s look the difference in compensation with respect to degree and years of work experience.
This is as clear as it can get. Irrespective of the experience, it indeed looks like someone with a PhD is earning more than someone with a masters degree on an average. Of course, there are outliers — ie a masters degree holder is earning more than a PhD with same work experience.
When Does a Masters and PhD Converge?
Now the question is — at what point does a masters and PhD holder earn equal amount? After three years or five years or 20 years of experience? The current dataset indicates never. In the following figure, I tried to show work experience (y-axis) and salary (x-axis). The two boxplots at every experience level indicates Masters and PhD degree holders. At any stage, the PhD is earning more than Masters. It is taking 8 years for a Masters degree holder to earn as much as someone starting their job fresh out of PhD.
Before jumping to additional conclusions, a few things to keep in mind — it takes an average of four years to finish a PhD. And most PhDs do a short (at least 2-3 years) of postdoc. Companies do consider (especially for R&D positions) these 7-8 years as work experience. Therefore, a fresher PhD is getting an equal salary as a masters with eight years of experience. This indeed makes sense. In addition, I often heard there is a limit to someone without a PhD on how much they can grow in the company, therefore earning less even with the same amount of work experience. I don’t know how true this is but the current data is clear.
Who Pays More? — Not Academia
I think the conclusion here is obvious and not much emphasis is needed. Start-ups, public companies paying a competitive salaries compared to private companies.
Who is Happy?
This is particularly interesting. In the survey, there is an (optional) open question — “company review”. Usually, many participants will ignore these open ended optional questions, this survey is not an exception. However, there are a good number of participants (279) who actually wrote what they think about their company. I extracted the emotion (positive, negative or neutral sentiments) based on the review participants wrote (link to code is at the bottom) and estimated whether an employee thinks positively or negatively about their company.
I tested almost all variables (e.g. company size, company type ie private/public, small or big, years of work experience) and their impact on an employee’s opinion of the company. None of these variables are associated with how someone thinks about their company with statistical significance, except one. The salary they earn.
Employees who see their company in positive light earn more than employee who see their company negatively. But something more interesting here is, none of the participants who has positive opinion of their company did not mention anything about salary. Almost always, the positive feeling is due to good leadership, management, culture, people they work with and the technology the company is producing. Here are a few of those comments —
“excellent company, great values, great leadership. wonderful teammates. excellent manager”
“It’s a great company with a great technology platform, excited to see where it goes.”
“100%, great culture and people, good balance”
Not surprisingly, someone with a negative opinion of their company wrote the exact points with a different sentiment — bad management, culture —
“Ugh I hate all those people who fabricate their data to get promoted”
“Chaotic leadership, bad morale and culture, frustrating job”
“Company culture is not great, work-life balance is non-existent”
The observation of higher (justified) wages seems to be the byproduct of good management and culture, treating their employees well. No one thinks their company is amazing just because they are making money but dealing with bad people all day, everyday.
Final Thoughts
Life is short, but a career is long. An average person works 80,000 hours or 40 years of their life. People should work on things they think is important, with people they like, earning what is justified based on their skills, knowledge and value they generate. Ironically, the later is almost always overestimated by the employee and underestimated by the employer. That’s the reality.
Money as a motivator has a bad stigma associated with it. In my opinion, there is nothing inherently wrong in wanting to make a good living, especially with globalisation people from third world countries moving to developed countries and wanting to change their and their family lives. As long as someone is not blinded by money and following illegal routes, we should normalize money as a motivator to generate value in return.
Something I think a lot about my own career is — how to accelerate my expertise and experience in order to gain more accountability and exposure in big organizations. It is impossible to gain 20 years of experience by working 5 years. But one can develop an eye to notice what are the common patterns among all those people with 20 years of experience (tacit knowledge) with leadership positions and should have a will to carefully replicate them to signal to your peers that your are a real deal. I wrote in the past some of the lessons I learnt from my experienced peers after working in a big pharma company. There is little research on how to fasten the expertise, even less in life science sector and management within. One needs to recognize how an experienced leader is behaving, what they are focusing on, how (and what) they are thinking about long term future. Cedric Chin from commoncog wrote extensively about identifying and learning based on tacit knowledge, accelerating expertise and general career development. Reading through material is one, but executing them is the ultimate deal.
P.S: You can find cleaned survey data and code here — https://github.com/itsvenu/DataScience-Projects/tree/master/Biotech_Salaries
Thank you for sharing your analysis related to salary vs degrees vs experience.