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Salary Survey 2012 - Product Design Engineering

 

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Salary Survey 2012 - General and Corporate Management

 
 

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Medical Device Salary Survey 2012: More Work, Fewer Perks for Medtech Employees

It has been a tough year for U.S. medtech companies, and employees are feeling the pain. Plagued by a sluggish economy and questions about healthcare reform, medical device and diagnostics manufacturers collectively laid off more than 5000 workers in 2012.

Salary Survey Data Tables
Click here to access a slide show of the salary survey data tables.

Those who managed to keep their jobs were not immune to the pressures facing the industry. MD+DI’s annual salary survey provides a clue as to how challenges—from the lagging effects of the recession to overall uncertainty—trickled down to employees across six job descriptions: general and corporate management, product design engineering, production and manufacturing, quality assurance and quality control (QA/QC), regulatory and legal affairs, and research and development (R&D).

This year’s data revealed that, like the devices they create, medtech employees are being asked to do more.

Slow Hiring 

Both sales and staffing are down at medical device and diagnostic companies this year. Median sales fell nearly a quarter from 2011, while the average number of full-time employees dropped 8.4% this year, according to our survey.

That’s not surprising, says Bob Jeffers, founder and CEO of Allen-Jeffers Associates Inc. (Laguna Niguel, CA), an employee placement firm that specializes in the medical device industry.  “The industry is contracting by and large,” he says. “There are a lot of demands put on it now that have not been in the past.”

Among those challenges are the struggling global economy, the healthcare market’s focus on cost containment, and healthcare reform in the United States, the world’s largest medical device market. No one knows how these factors will play out, and that uncertainty has not been good for the job market.

Methodology

The survey sample of 1635 was selected in systematic, stratified fashion by UBM Canon and Readex Research from MD+DI’s domestic circulation in the categories of finished medical device manufacturers and/or in vitro diagnostic manufacturers, representing 27,058 recipients at the time of sample selection.

Data were collected via mail survey from July 17 to August 29, 2012.  The survey was closed for tabulation with 457 usable responses—a 28% response rate. As with any research, the results should be interpreted with the potential of nonresponse bias in mind. It is unknown how those who responded to the survey may be different from those who did not respond. In general, the higher the response rate, the lower the probability of estimation errors due to nonresponse, and thus the more stable the results.

The findings highlighted in this report are based on the 374 individuals who indicated they are involved in the industry and work full time in firms manufacturing finished medical devices and/or in vitro diagnostics, representing approximately 22,000 MD+DI recipients.

The margin of error for percentages based on 374 usable responses is ±5.0 percentage points at the 95% confidence level. The margin of error for percentages based on smaller sample sizes will be larger.

“I think there’s a lot less hiring going on,” says Tom Johasky, general manager and president of executive search and recruitment firm Medical Device Recruiters (Fort Lauderdale, FL). He says he sees around 40% fewer job openings at medical device companies than he did before the recession.

Interestingly, despite the tough job market and recent layoffs in the industry, some employees seem to be optimistic about their job security. While two-thirds of our survey respondents said they feel about the same about their job security, 16% reported feeling a higher level of job security than they did 12 months ago—an increase of one percentage point over 2011. Likewise, the share who feel less secure about their jobs fell by two percentage points, to 16%. 

“It’s wishful thinking more than anything else,” Jeffers says. “Several major players have indicated that they’re not going to increase domestic operations or positions available, and they’re either going to have layoffs or attrition.”

Johasky agrees. “I think that maybe they’re hoping that a lot of the major layoffs and reductions are past them, and that they’ve lasted this long, and they’re hoping for the road ahead to be a lot rosier than it has been,” he says.

Longer Hours

When companies can make a hire, Johasky says many choose to bring back employees who were previously laid off. But some vacated positions are not being filled. “They’re not replacing people who have moved along or have been moved along, and they’re expecting to get the same amount of work out of a fewer number of employees,” he says.

There was evidence of that in the salary survey data. Respondents reported putting in a median of 50 hours of work per week, two more hours than last year. “The 40-hour work week in the medical device industry is a thing of the past,” Johasky says. “Because of economic conditions, companies are asking their employees to do a heck of a lot more than what they’ve ever done.” 

Though medtech companies are asking more of their employees, they don’t appear to be rewarding them with increased compensation. This year both median salary and median total compensation remained flat, at $100,000 and $120,000, respectively, according to our survey.

Respondents reported a median raise of 3%—the same as in 2011—but more employees than last year said they have not received a raise at all from their current employer. A lower percentage of respondents also reported receiving bonus compensation over the past year. While nearly two-thirds reported getting a bonus in 2011, just 58% said they got a bonus this year. The median amount of bonus compensation dropped as well, to $7500—down 20% from 2011. More than one-third of respondents said they did not receive a bonus over the past 12 months.

“Typically, bonuses are connected to the overall performance of the company, so if they are not generating a profit, no one receives bonuses,” says Cindy Johnson, CEO and president of Chozen Inc. (San Ramon, CA), a professional search firm specializing in the medical device industry.

Benefits have also suffered. A smaller percentage of employees reported receiving perks including health insurance, 401(k), stock options, educational benefits, and profit sharing. Jeffers says that could be a result of more employees striking out on their own. “There are more consultants now than there were in the past and more temporary workers than in the past, and as a result they have to pay for their own benefits or they don't’ have them,” he says.

Happy to Have a Job

Still, despite stagnant salaries, fewer raises, a decline in bonus compensation, and dwindling benefits, medtech employees seem to be more satisfied with their jobs. Job satisfaction ticked up almost 3% over 2011, and more than two-thirds of our survey respondents said they are “satisfied” or “very satisfied” in their current positions. 

“They are seeing far too many of their coworkers being laid off, and they’re buckling down and keeping their heads low,” Johasky says. “They’re just happy to have a job and happy to have a paycheck, whereas five years ago they would be making a lot more noise.”

Important Links
Want more?  Download the full salary survey results, including data for each of the six job functions and the industry as a whole, for free. All you have to do is register.
 

Not surprisingly in this tough job market, fewer employees are trying to leave their current company. Employees actively looking for a new job or considering a job search are down five percentage points. 

The housing crisis could also be contributing to that, Johasky says. “Opportunities that are arising for some of these employees are going to require relocation,” he says. “But if they’re underwater on the value of their real estate, they have no choice but to stay where they are.”

That’s especially true because companies overall aren’t as inclined as they have been in the past to offer relocation assistance or signing bonuses, Johnson says. Some companies make an exception for executives, though, says John McLean, managing director for the central region and coleader of the life science practice at executive search firm Witt/Kieffer (Oak Brook, IL). He says some firms provide perks such as interim housing to lure executive hires who might be hesitant to relocate when housing prices still haven’t fully recovered in many parts of the country.

Where the Opportunities Are

While it might all sound like doom and gloom, there are bright spots in the medtech job market. Median salaries and median total compensation rose for employees working in production and manufacturing, QA/QC, regulatory and legal affairs, and general and corporate management roles this year, according to our survey. Only R&D and product design engineering jobs showed declines. 

At 14%, general and corporate management roles saw the biggest relative median salary increases. Production and manufacturing salaries grew by more than 7%, and QA/QC and regulatory affairs salaries increased by around 4%.

Segments of the industry expected to see strong job growth include cardiovascular, neurovascular, and orthopedics—“areas where the population is aging,” Jeffers says. Globalization in the industry has led to fewer domestic jobs in production and manufacturing, Jeffers says, but the experts agree that companies in the U.S. have a demand for professionals in regulatory affairs. 

“I think the [regulatory] microscope these past few years has been stronger in medical devices and diagnostics than in the past,” McLean says. “As a result, firms are ramping up their ability to be ahead of the curve in terms of regulatory issues and quality issues, and that drives the need for that particular role.”

The problem is finding candidates to fill those jobs. “I see that there is a great demand for those people, but I see a lack of people available and qualified to fill those positions,” Johasky says.

Employers typically look for candidates with at least 3–5 years of experience, Johnson says. But with older employees putting off retirement, there have been fewer opportunities for entry-level employees to get their feet wet in the industry. One-third of the medtech employees who responded to our salary survey are aged 55 or older, whereas just 5% are under 30 years old.

“You’ve gone through four years of flat or reverse growth, so it’s hard to find more people at lower levels to do the jobs that need to be done,” Johasky says.

Predictions for 2013

Some of the challenges the medical device and diagnostic industry faced this year show no signs of abating, and more are appearing on the horizon. One that will likely have an impact hiring and salaries is the 2.3% tax to be levied on medical device sales starting January 1, 2013. 

Industry leaders have said the tax will force them to slash R&D budgets, but that can’t last forever. “I think companies will be getting stronger back into R&D—that’s their life blood,” McLean says. “But how long it will take, I don’t know.”

 Others are also cautiously optimistic. “I anticipate steady growth,” Johnson says. “Nothing over the top, but if we can keep the same pace and not slip backwards, that is a good thing.” She predicts hiring will hold steady or increase slightly in 2013 but does not expect much change in compensation. 

Uncertainties with regard to the economy and healthcare reform continue to be barriers to job and salary growth in the industry.

“A lot depends on whether Obamacare stays as the rule and whether we fall off the fiscal cliff as may happen as of January 1,” Jeffers says. “The biggest problem is the unknown; money doesn’t like uncertainty.”

Some questions were put to rest with the results of the 2012 presidential and congressional elections, and 2013 will bring more answers regarding how provisions of the Affordable Care Act will play out for medical device and diagnostic manufacturers. 

“We’re going to be turning the corner in terms of the certainty issue, and I think it will have a nice effect on the industry as whole,” McLean says.

Jamie Hartford is the managing editor of MD+DI.

Micro Borescope by Lenox Instrument Company

Available in flexible and semirigid models, a company’s micro borescope delivers a clear, bright image in close-range inspection of medical devices such as coronary stents, tubing, electronic and mechanical assemblies; and micromolded, machined, and cast parts. It is optimized for use in applications in which access is limited and the insertion point is only a few millimeters in diameter. Provided in diameters down to 0.02 in. and in standard lengths of 4 in. to 50 ft, the borescope can be supplied in other lengths and custom configurations as well. Featuring a focusing eyepiece and a fiber-optic bundle that provides good resolution, the product can tolerate tip deflections and moderate bending owing to its rugged design and durable construction. All models are video- and digital-adaptable, allowing users to view and record real-time or still images and store them for reference. The Micro borescopes are compatible with the manufacturer’s color video systems and light sources.

Trevose, PA

Embedded Electronics Connector Technology From Onanon

Suitable for use in medical electronics applications, a company’s connector technology integrates electronic components into connector plugs. By inserting full-fledged computers between connector pins, the embedded electronics connector technology enables OEMs to embed value-added, intelligent, microscale systems into their connector designs while enhancing the capabilities that engineers can introduce into medical devices from their connectors. The drop-in replacement connectors can also include small PCBs for performing device ID, use-limiter, EEPROM, and fine-tuning functions. The company’s rapid wire-termination technology makes connecting wires to a PC board connector substrate easy as well. And by allowing users to replace the connector plugs using ordinary tools, the embedded technology simplifies the task of upgrading medical device systems. In addition, it dispenses with the use of solder, which can damage PCBs.

Milpitas, CA

Medtech Predictions 2013: Five CEOs and Chairmen Look Ahead

Medtech Predictions 2013: Five CEOs and Chairmen Look Ahead

While the results of these events helped to assuage some of the uncertainty that has plagued industry, they have also raised questions about how to move forward. The goals for industry are to solve the greater problems that lay ahead in 2013. Industry CEOs and presidents (from associations as well as large, medium, and small medtech companies) shared their predictions for 2013. These ideas are both personal and universal.

Karen Licitra, Worldwide Chairman, Global Medical Solutions, Johnson & Johnson:

An important area of opportunity is to accelerate experimentation with new business models. This will come in many forms: collaborating with other industries, partnering with payers, and working with governments. The key question facing healthcare globally is how do we control rising costs? Our job as an industry is to experiment with new models that help demonstrate our value through outcomes—both cost and clinical. We need to evolve our capabilities so that we drive value. Traditionally, our industry has gone to market with products with the individual clinician in mind. This still is important, but our customers are dealing with hundreds, thousands of patients. How do we create new business models that aim to drive outcomes while reducing costs for more people? This will most likely happen when stakeholders at every level come together. My prediction is we’ll see more of this in 2013. We need to reach our customers with a value proposition around solutions that address their most pressing needs. 

Dale Wahlstrom, President and CEO, LifeScience Alley and BioBusiness Alliance of Minnesota:

The big issue in the medical device world still has to be the uncertainty of the industry in the eyes of investors and developers because of the environment. Investment, regulatory review cycles, and other parts have to function as a system to make it as robust as it can be.

Peter M. von Dyck, CEO, e-Zassi:

I believe that the perfect storm of market reforms in healthcare policies, patent laws, and international business regulations has created difficulties in accessing the capital that has typically been available for development of new products. These uncertainties have stunted the availability and flow of capital to fuel the creation of new medical device products and companies. Without the resources necessary to make it to the marketplace, many new innovations are stuck in the early stages of development. However, I predict that the industry’s increased adoption of open innovation business methods combined with its need for advanced medical technologies will create new channels of connectivity and awareness of these new product opportunities, allowing them to be aligned with the right financial and development partners who can help get them to market.

Stephen W. Sagon, President and CEO, CardioFocus Inc.:

The proposal to revise the European medical device amendments will serve to make it more difficult to perform early stage research in Europe. Will the United States be interested in competing once again to be the home for international medical device research, or will we blink and therefore nominate some other region of the globe to take up the slack?  I am planning to spend more time in Asia!

Mike Mussallem, Chairman and CEO, Edwards Lifesciences:

We all know that the greatest value of the medical device industry lies in its ability to innovate for patients to live longer and happier lives. The climate we currently face, coupled with the Medical Device Tax, is causing innovation to seriously slow as the time-consuming and expensive process to develop new devices becomes less certain and rewarding.  I’m hopeful that in 2013, the opportunity cost of this risk-averse climate becomes an incentive for more certain, swifter pathways for important innovations.


Heather Thompson is editor-in-chief of MD+DI. She predicts that 2013 will bring new emphasis on start-ups and reimbursement.  

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Omar Ishrak, Medtronic CEO, on the Medical Device Industry; Tweetable quotes from AdvaMed 2012 

Optical Gaging Products' Benchtop Metrology System

A company offers medical device manufacturers high-speed measurement and QC capabilities with its new benchtop measurement system and companion analysis software. The SmartScope Specialist 300 is a noncontact video and multisensor metrology system that verifies the critical dimensions of such medical parts and products as prosthetic joints, implants, syringe components, and flow components with micron-level accuracy. It features x-y-z travel of 12 × 12 × 10 in., machined-in axial straightness and perpendicularity, and a patented twin-Z elevating bridge for structural integrity. Telecentric motorized zoom optics, a high-resolution gray-scale camera, narrow-band green LED surface and profile illumination, and sophisticated image processing together produce sharp images scarcely affected by variations in part finish. In addition, a system configured with a special miniature probe can access tiny features on delicate microparts while one equipped with an optional through-the-lens laser can map complex surface contours.

Rochester, NY

CDRH ‘Puzzled’ by Class 1 Recalls Jump

CDRH says it is uncertain why there has been an increase in Class 1 medical device recalls over the past four years. Speaking to a Regulatory Affairs Professionals Society conference session in Seattle in October, CDRH Division of Risk Management Operations director Ann Ferriter said Class 1 recalls have increased from an average of 25 before 2008 to 50 and 57 such recalls in 2011 and 2012, respectively.

“We have seen a large increase in Class 1 recalls between 2008 and 2012,” she said. “Our analysts are looking at why this is. We have had the same standard of ‘reasonable probability of serious health consequences or death.’ So we are going back through our old data so that we can understand whether that standard has been upheld consistently or perhaps 10 years ago we were less likely to classify something as Class 1... but we haven’t changed our standard at all.”

75% of all recalls fall into Cardiovascular, Chemistry, General Surgery, General Hospital, Orthopedics, and Radiology medical specialty areas, according to Ferriter. Recently, the most frequently seen recalls involve radiology and cardiovascular devices, she said, with a large spike in radiology following press reports about CT scans and accidental radiation overdosing that has caused more vigilance from radiology firms. “We expect that trend to level out,” she said. 

A CDRH “root cause” analysis of previous recalls shows that 49% are related to design controls, Ferriter told the RAPS session. “Go back to CFR 820.30 and see what is in the quality system design controls you can do better to prevent these design control-related recalls,” she said. “Dig deep into why these recalls are happening. What we would like to see is more recalls prevented early, perhaps through better design validation and better testing.” Other root cause categories include material/components (19%), process controls (15%), packaging/labeling (11%), and change control (6%).

Additionally, Ferriter said the Center has seen an uptick with software-related recalls. “Firms really struggle with releasing high-quality software,” she said. “Perhaps there needs to be better testing or better validation, and maybe more involvement with clinical people upfront in the design of the software so you get the right algorithms. We have also seen an increase in component-related recalls. We are concerned that your supplier controls are not as rigorous as they could be, and we would like to see that level back down.”

Obama’s Legacy: A Tougher FDA and the Device Tax

Obama’s Legacy: A Tougher FDA and the Device Tax

The Congressional Budget Office estimates that the tax is expected to generate $29-billion within a decade. It remains a possibility that the tax is repealed or its implementation date postponed. 

Obama signing the Patient Protection and Affordable Care Act at the White House in 2008. Image from Wikipedia. 

The rationale for the new tax is the administration’s belief that Obamacare will generate new sales revenues for a number of industries—not just device makers—that will therefore be well able to afford to pay it. Affected industries, including hospitals, health insurance firms, home health agencies, drug companies, and clinical laboratories, all deny this. Nobody likes to pay tax.

Quoting Freedom Works, the Washington Times in November listed Abbott Labs, Boston Scientific, Covidien, Dana Holding Corp., Hill Rom, Kinetic Concepts, Medtronic, Smith & Nephew, St. Jude Medical, Stryker, and Welch Allyn as device companies that had reported excise tax-related employee layoffs.

The new tax isn’t the least of the device industry’s Washington problems in Obama’s second term. Regardless of the outcome of its efforts to achieve repeal, the medical device industry needs to be alert to the less visible threat of heightened regulatory attention, especially from FDA.

While the Obama administration has vowed to encourage job creation—and new taxes and regulatory crackdowns arguably hurt job creation—its improved electoral position and any second-term president’s tendency to focus on legacy mean that health-safety concerns will get more attention than they might have before the election. This is especially the case when weaknesses have been publicly pointed out in the regulatory protections which FDA is charged with providing.

Obama’s reelection occurred just after publication of data from Stericycle ExpertRECALL showing that although the number of individual device product recalls was down 12%, the total number of products affected hit an eight-quarter high in the second quarter of 2012, exceeding 100 million units for the first time in nearly two years.

This was reported as the agency was being buffeted by Capitol Hill and media criticism of its regulatory failures in an unrelated public safety arena—deaths from high-volume prescription compounding.

All this as memories were still fresh—and litigation was proceeding—from the long-running CDRH dissident scientists/whistleblowers case based on allegations of improper FDA management handling of device product reviews (next item), alleged political interference in device product reviews, and agency electronic surveillance of whistleblowers’ emails. To say nothing of an FDA contractor’s exposure of thousands of confidential industry documents on the Internet.
As the dust settlers from the “fiscal cliff” negotiations, this White House and its often-conflicted counterweights on Capitol Hill will have numerous delicate tightropes to walk—but increased regulatory activities aimed at increasing public safety are not likely to be among them.

At what point is capitulation to critics an appropriate response?

A small bellwether of this, in the sense of how regulated industry deals with Washington, might have been noticed in the drug compounding fiasco. After more than a decade of trenchantly—and successfully—opposing increased FDA power over its members engaged in high-volume production, the embattled International Academy of Compounding Pharmacists reversed course and divorced itself from the so-called “pharmacy” that allegedly caused the problem, saying that it should have been held to FDA good manufacturing practice regulations.

There is an FDA resources issue in this kind of expansion, of course. If the agency is to improve its surveillance of high-volume drug compounders and medical device recalls, for example, it will need more resources in order to do so. The current political and media attention on the former makes this likely, but the case may be a little harder for the latter.

How the encouragement of job-creators argument will weigh in Washington against the argument for enhanced medical product safety remains to be seen, but my bet is that this legacy-focused White House will find a way to do both.

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 Jim Thompson, Siemens PLM Software director will present the basics of product life cycle management for orthopedic and other medical device products. 

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