During high school summers, I caddied at a country club, and some of the members were physicians. When they asked what major I wanted to pursue in college, I said bioengineering because I wanted to be a doctor. They told me that medicine today wasn’t what it was like when they started, and every physician I met at the country club informed me that their own children were not pursuing a career in medicine. I thought that was odd.
In my third undergraduate year of bioengineering, I met with the school's pre-med advisor. As I cautiously entered her dimly lit office, I perceived a general malaise. She told me unprompted that her husband was in his mid-40s and still hadn’t paid off his student loans. I didn’t probe further, but I thought it was interesting that she shared something so personal with me and with no context and detail.
Deterred, I pursued a PhD and did not incur student loans. I conducted experiments for five years. I lived in abject poverty yet was distracted and joyous. I rode a bike to and from the laboratory every day. During my graduate studies, I didn’t have any time to think about what would happen after my PhD. I assumed I would go into academia. When I graduated in 2015, all faculty positions were stuffed to the brim. Most of the professors I knew were miserably pounding 15 cups of coffee a day and fighting for their lab by writing grant after grant after grant. My friends accepted jobs as a postdoc or an adjunct for $30,000-$40,000 annually.
While I reveled during my graduate school years in poverty, I'd simply had enough. The day I defended my thesis, I accepted my first full-time job as a pharma sales rep, much to the chagrin and shame of my thesis advisors. I started making more than six figures.
Since then, I have spent six years in the biotechnology and pharmaceutical industry. The goal of this post is to share my experience and knowledge for those considering a career in biotech—and how physicians could find financial success there.
MDs Reign Supreme in Biotech
Biotechnology companies hire individuals with numerous degrees. However, MDs reign supreme and often work in Medical Affairs or Clinical Development. Medical Affairs is tasked with mostly post-approval medical education and the engagement with physicians in the field who manage patients with the disease for which a product is approved. Medical Affairs has numerous sub-functions with specific activities:
- Medical Strategy: Develops the annual strategic plan, runs advisory boards, manages the presence at medical congresses (including medical symposia), authors mostly non-trial publications, manages investigator-initiated trials and compassionate use cases, and serves as the overall medical therapeutic lead and the reviewer for accuracy for the disease and product.
- Medical Field: Lives anywhere in the country, travels to engage with medical experts, and reactively answers questions about the product. They also can discuss off-label concepts.
- Medical Information: Often manages a call center to respond to medical inquiries and reports, and provides standard response letters.
- Medical Education: Manages CME.
- Medical Communications: Produces medical materials used at congresses, like brochures, posters, and videos about the mechanism of action of the product or disease.
- Patient Advocacy: Liaises with patient advocacy groups.
- Publications: Project manages publication plan and medical writing team.
In contrast to Medical Affairs, Clinical Development is tasked with more upstream activities like writing protocols, managing clinical trials, and corresponding with the FDA on pre-approval activities. Unlike Medical Affairs, Clinical Development has fewer sub-functions and often requires specialization in the disease state the company is pursuing. For example, Dr. Sandra Horning, former CMO of Roche and Genentech, began her career at Genentech in oncology Clinical Development after spending her Stanford career practicing as an oncologist.
Ph.D's and PharmDs also work in Medical Affairs and Clinical Development. However, there is often a ceiling, and the career trajectory is slower. NPs, PAs, and RNs also can work in Medical Affairs but not often in Clinical Development. However, NPs, PAs, and RNs sometimes work in Commercial. Finally, most MBAs without a doctorate work in Commercial. However, many in biotech boast numerous degrees including a doctorate and an MBA, an MPH, or even two doctorates.
These represent trends, and they are not a rule. However, some job calls specify degrees required.
Compensation in Biotech
Base salaries for most MDs range between $200,000-$300,000, and this includes the unique 20% multiplier-to-base salary that only MDs receive. Smaller biotech companies pay less base than larger pharmaceutical companies. However, smaller biotech companies will likely offer ample equity that could prove lucrative following a successful IPO and/or product launch.
Bonuses are often 15%-20% of a base salary and are paid at the end of Q1 each year. You must be present the entire calendar year to qualify for the annual bonus. This requirement for bonus payout is why most people in biotech/pharma resign for future opportunities in April and May.
In addition to base and bonus, equity can be offered as part of compensation. Equity can consist of restrictive stock units (RSU), incentive stock options (ISO), and access to an employee stock purchase plan (ESPP). The value of equity compensation is highly dependent on a company’s stock price.
Most companies offer a 3%-5% 401(k) deferral match. Middle to larger biotech companies will also offer access to after-tax contributions, the latter of which I find a particularly useful investment vehicle for retirement. In addition, they offer health insurance (including access to an HSA with an HDHP), dental, and vision with very low premiums.
Additional perks can include internet and fitness reimbursements. If you are a field representative, you will be provided a company car with all expenses (gas, maintenance, insurance, tolls) either paid for or heavily discounted.
It is possible to enter biotech after graduating medical school and without going to residency. However, your compensation may likely be <$200,000 to start. Biotech companies seek value from MDs who are experts in their given field, which is why those who have not seen patients may be paid less to start. However, the lack of patient experience will not likely hinder your overall career trajectory.”
Career Trajectories in Biotech
MDs begin their biotech career at the Director level. Several years thereafter, most are promoted to Senior Director, where they manage Directors or Associate Directors. While moving from Director to Senior Director is straightforward, moving from Senior Director to Executive Director and beyond is not guaranteed. The Executive Director and VP roles are highly visionary and political, and they effectively serve as grooming for the C-suite. You can become a CMO either through Medical Affairs or Clinical Development. However, the most likely way to become a CMO is to leverage prior experience in both functions.
You will still be doing tedious, high-knowledge work at the Director and Senior Director levels. Some colleagues prefer to stay at the Senior Director level because they are genuinely passionate about science and are not interested in the chess-like political power plays required of the levels above.
Equity: Precarious and Lucrative
Most CMO base salaries max out at around $300,000-$400,000. However, don’t be fooled, as most are compensated in the millions with equity. You can find the compensation of chief officers in any company’s 10-K annual report. For example, the CMO for Terns Pharmaceuticals, Erin Quirk, made a base of $374,325 in 2020. However, her total compensation was $3.84 million due to options and non-equity incentive plan compensation.
Importantly, the SEC mandates the public filing of Form 4 for any officers, directors, and any shareholders that own 10% of a company’s outstanding stock. I recommend monitoring these movements if you are invested in an individual company, because they shed light on what is really going on.
In 1998, at its zenith, the telecommunications spin-off, Lucent Technologies, was trading at $128.88. Four years later, the stock bottomed out at $0.76. If you were watching the insiders, they were offloading their stock like you might urgently toss belongings off a ship in a panic. If you weren’t paying attention, your net worth dropped 170-fold. The infamous rise and fall of Lucent reveal why you should be monitoring a company’s stock if you hold it, which will likely be the case if you work for a biotech company.
Another reason to monitor stock prices is a potential merger that could send your stock to the moon unexpectedly overnight. The biotechnology and pharmaceutical industry is rife with mergers and acquisitions (M&A). This is because larger firms lose the adroitness and innovation needed to generate the next disruptive technology. However, larger firms can leverage the established technical infrastructure required to bring a drug to market. Thus, many large firms acquire new drugs through acquisitions of smaller companies. Clayton Christensen’s The Innovator’s Dilemma describes this phenomenon in detail across other industries.
A slew of big biopharma M&As characterized in 2021, and there is no end in sight. In October 2020, Bristol-Myers acquired MyoKardia for $13.1 billion to boost their cardiovascular pipeline. The deal sent MyoKardia ($MYOK) stock soaring 59%, nearly up to the acquisition price of $225 per share.
I expound upon the equity aspect of working in biotech because I know many people who have been at the right place at the right time, and it’s completely changed their personal finances.
Biotech Exit Opportunities
While physicians often leave practice to enter the industry, I have never known a physician to leave the industry to go back to practice. That’s not to say it doesn't happen.
As a PhD, I have had a good run in Medical Affairs in biotech. However, I am hitting a ceiling with my degree in Medical Affairs. I recently completed an MBA and began blogging about personal finance at Millennial Musings on Money. My goal is to share financial strategies for everyone. I prefer using data from primary sources to elucidate trends and draw conclusions, because I’ll always be a scientist at heart.
After many years of being fascinated by the magic and mystery of science and medicine, I believe my future passions lie in business. I may continue in biotech but move into a business function, or I may leave the industry altogether. I don’t regret pursuing a Ph.D. rather than an MD after those early omens at the country club. Rather, we are all on a journey, and that unique journey may zig-zag as we get signals from the world.
One thing is for certain, however, and that is I am a lifelong learner and will always seek opportunities to expand my mind and broaden my horizons.
Have you ever thought about leaving medicine for a field like biotechnology? Do you think you could make more money? Could it be better for your work-life balance? Comment below!
[Editor's Note: Alex Hamilton is a millennial engineer with an MBA who believes in sharing a simplistic approach to saving and investing for those whose passion and expertise are not necessarily in finance. He also writes at Millennial Musings on Money. This article was submitted and approved according to our Guest Post Policy. We have no financial relationship.]