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Strawn Arnold, a premier boutique executive search firm serving life sciences clients since 1974, is pleased to announce the promotion of Barry S. Duke and Jenny M. Crutchlow to Partner.

“Barry and Jenny have quickly distinguished themselves through their search work for clients and through their internal contributions to the firm,” said Managing Partner Jeff Ashpitz. “We are pleased to recognize their work and value to our organization with this important Partnership milestone.”

Barry Duke joined Strawn Arnold in August of 2017 after 30+ years as an executive in the biopharma industry having worked for organizations such as The Upjohn Company, Centocor, Elan, Genzyme/Sanofi, and his last industry role as Chief Commercial Officer at Collegium Pharmaceutical. With a strong industry network and reputation, coupled with an ability to provide insights to his clients and candidates based on the real-world experiences of “having walked in their shoes,” Barry has been able to develop a robust executive search practice over his short tenure with the firm. Focused on biopharma clients, Barry works across all functional areas at the Board, C-Suite, VP, and Senior Director levels. Barry can be reached at [email protected] and 704-236-3215.

Jenny Crutchlow joined Strawn Arnold in May of 2018 after nearly a decade between Diversified Search and Solomon Page Group, two of the largest executive search shops in the US, working primarily in the healthcare sector. Her time in these firms allowed her to hone her “pure search skills” and develop strategic process practices and recruiting rigor to search for top talent with laser focus, bring them to successful offer, and act as a trusted consultant to her clients and as a resource for senior executives. Jenny works across practice areas, including medical device, biotech, and pharma, and across all functional areas and levels from Director to C-Suite. Jenny can be reached at [email protected] and 917-676-5639.

The Search Market From 5,000 Feet

Executive search is a very cyclical profession. In my 20+ years doing life sciences senior executive search I have worked through three downturns: The dot-com bust in late 2000 that rolled into 9/11 and thereafter; the financial crisis beginning in 2008; and the current Corona Virus pandemic. Might a brief review of the prior downturns give a bit of insight into what we might expect for our current Covid-19 world? If we look at the North American (US & Canada) revenues of two of the largest publicly-traded executive search firms (then and now and also among the five largest in the world) and use them as a proxy for the industry’s fortunes overall, we see that the prior slowdowns were significant. 

For the dot-com to post 9/11 period, revenues peaked in either late 2000 or the first few months of 2001, and then began declining at a  roughly 20% compound annual rate for approximately three years. From peak to trough, revenues fell over 50% on an absolute basis, attributable primarily to declines in the number of executive searches. During the financial crisis, the downturn was not as steep and didn’t last as long. Revenues peaked in 2008 (though the decline began in the second half of that year) and fell for two years at a roughly 15% compound annual rate. Overall, revenues fell between 30% and 40% on an absolute peak to trough basis.  Similarly, the declines were largely due to decreases in the number of searches.

Not surprisingly, in 2020 since US lockdowns began in earnest around March, the first quarter of this year was quite a bit better than the next 3 months. Revenues declined relative to the same period in 2019 by 7% to 10% in the first quarter, but were off by approximately 15% to 35% in the second quarter of 2020 compared to 2019. As for the rest of 2020, anecdotally, people I’ve spoken to don’t necessarily expect things to be worse than they are now (i.e. they don’t see revenues continuing to rapidly fall in quarters three and four) but they don’t expect a return to growth now either. This could perhaps imply the first year of the Corona Virus could take search revenues down 25% to 40% [Of course, all this speculating and $6 could get you a latte]. 

Strawn / Arnold is a premium-level, life sciences-only boutique firm (11 consultants) and is furthermore a private partnership. Our business, like everyone’s, is certainly down meaningfully relative to 2019 but it is now also stable. We do not see results getting worse every month, we expect things to continue as they’ve been the rest of this year, and are cautiously optimistic for 2021. Obviously, for the search industry and the economy as a whole, progress against the pandemic will have much to say about what happens in 2021. Hopefully this will only be a one year downturn as opposed to the two and three year slumps that characterized the financial crisis and dot-com bust to post 9/11 periods respectively.

What We’re Seeing in Life Sciences

The pandemic is affecting but not fundamentally changing the supply/demand dynamic that always operates in the market for executive talent. Those functions/roles that have restricted supply of quality people and robust demand for them continue to see more search activity than those where the converse operates. However, the pandemic has helped some companies, upended some, and not appreciably changed the plans or fortunes of  others. For example, manufacturers, developers and marketers of Covid-19 related medicines or vaccines are of course very busy if not expanding and growing. Overall the pandemic has also led to steady demand for hospital drugs, though many of these are generics and price competition remains fierce. 

On the other hand, the pandemic has hurt the ability to enroll patients in some clinical trials and/or to interpret the results of ongoing trials (this isn’t affecting everyone as it depends on the particulars of the compound and trial). The Corona Virus has also made it harder to launch products, made it harder to sell and market existing products and temporarily disrupted supply chains. Companies generally are also more cautious, hunkering down so to speak until they see signs of stability/turn-around or clear evidence that the current realities will become the “new normal” far into the future.

All of these things, good or bad, impact executive hiring. Below are some headline observations in that regard.

• Demand for stand-alone company Chief Financial Officers remains brisk across all life science sectors (biopharmaceuticals, medical devices, diagnostics etc.) Prior experience raising money, taking companies public and managing investors are always sought after.

• In biopharmaceuticals, demand for Chief Medical Officers, heads of regulatory, and clinical development leaders is always strong; these are classic constricted supply/strong demand roles. Demand for corporate development and business development leaders also remains good to steady, though the relative supply of these people is larger, so supply and demand is more balanced. There is good demand for marketing executives but it is very therapeutic area centered (e.g. oncology, rare diseases) and somewhat harder for the big pharma traditional marketing “athlete” that worked across many TAs over time to position themselves as experts in a particular space. 

• In the biopharmaceuticals operations realm,  oral solid dose and API manufacturing is now largely done in India and China. The supply of executives in this space in the US has fallen sharply (retirements and people moving into biologics or other areas) along with demand. No surprise there, right? It remains to be seen when or if pandemic-related calls to “reshore” the US pharma supply chain would take hold. However, in tech ops and manufacturing/site 

operations, demand for biologics, biosimilar and small molecule sterile injectable expertise remains steady if not high.

• The brutal pricing environment in generic drugs and niche “mature products” has hurt private equity, as these were often their investment targets in the life sciences products space (in contrast to early-stage proprietary drug VC investors). We have seen them moving away from generic/mature products investments and increasing their efforts on the services side with CROs, contract manufacturers and contract development businesses (i.e. CDMOs).

• Earlier this year, the pandemic-related prohibition on elective surgeries in hospitals killed demand for many medical device companies (and also badly hurt provider profits), but this has now largely abated and absent another major lockdown due to the virus won’t likely return.
• As always during particular times of stress, the pandemic environment will push many companies into danger and necessitate major change. This will create C-Level turnover.
• In general, larger companies have deeper talent benches and more robust functional processes and infrastructure than smaller ones. As such, they are perhaps less likely than smaller entities to need to look outside for talent (unless confronted with major change at the top as referenced above).
• The willingness of executives to relocate for a new opportunity has steadily declined in the 20+ years I have been in executive search and the life sciences. In fact, today many executives won’t even do long daily commutes in the same region or metro area (e.g. Palo Alto to Marin County, the Princeton area to northern New Jersey). One of the main reasons for these trends I believe is the more transactional, “hired gun” approach to the relationship between executives and their employers (i.e. “I need to you do this job for the next 3-5 years and help us sell the company” versus “This is one move among several we think you will make with us over the next 15 years and will be a key step in our career development path for you.”). Additionally, if they live in a life sciences concentrated area (e.g. San Francisco Bay, Boston, Philadelphia, Chicago perhaps), executives generally don’t have to move to find new, compelling opportunities.  Technology has also made it easier to work virtually or on a partial commuting basis, and some executive teams are a mixture of virtual and office-based executives (“if the CEO’s hasn’t relocated then why should I?”). In my opinion, the pandemic has cemented and accelerated this trend, and has shown that working outside the office is more feasible than some traditional executives might have once thought. Going forward, companies’ mindset should be that “It’s more about the talent than the location,” and at a minimum they should be flexible and creative with commuting situations.

Time For A Board Check-Up?

The famous 18^th century British historian Edward Gibbon once said, “The wind and the waves favor the ablest navigators,” and this clearly applies to corporate governance. Good board leadership (from the Chair, Lead Director and Committee Chairs) entails periodically and objectively evaluating whether an organization’s board of directors remains optimally fit for purpose. Specifically, 1) Are all board members robustly up-to-date and informed about an organization’s business and the issues and trends coursing through its industry? 2) Does the organization have the ideal mix of Director experience and perspective around the board table? Or, are there key gaps relative to current and/or expected future developments? Similarly, is there duplication in some areas in addition to a gap (e.g. multiple people with commercial experience but lacking in another function or geographic perspective)? And finally 3) What is the culture of the board and mix of personalities like? Do all board members contribute relatively equally or do one or two people tend to dominate and drive decision-making? And if this is the case, why is that? Is it purposeful design or more a function of individual styles and personalities or the way the board is led? 

The changes being wrought by the pandemic to past strategic assumptions, business models and organizations are significant and will likely be far-reaching. Simple, highly-effective tools and processes can be readily employed to help board leadership objectively answer some of these fundamental board composition questions. A variety of entities advise organizations in this regard, including Strawn / Arnold. Regardless of how an organization goes about this, it is a crucial foundation of corporate governance, especially in our current times.

A Book Recommendation

Dr. Ezekial Emanuel, a physician and Chair of the department of Medical Ethics and Health Policy at the University of Pennsylvania (no, I am not his agent!) has a new book out: Which Country Has the World’s Best Healthcare? The book is an analysis of the history, structure, issues/opportunities, barriers to change, and pros/cons of eleven health systems around the world: US, Canada, UK, Norway, France, Germany, Netherlands, Switzerland, Australia, Taiwan and China. 

He adeptly points out that there is no perfect system and that all offer strengths, weaknesses and challenges relative to one another. However, though drug costs are a politically-charged topic in the US, the book also points out that right or wrong, there are increasing concerns about high drug costs in all of the countries studied in the book. Something for all of us who believe in the bright future of the drug industry to address with creative, effective, just and innovative solutions.

Be Well 

I hope you have found these few pages interesting. I welcome your comments, and please don’t hesitate to contact me if I can ever be helpful to you in any way. I especially hope that you and your 

families are doing well during these crazy times. I will leave you with the sentiments of the late comedian George Carlin……”May the forces of evil get lost on the way to your house.”

All the best

Jeff