Below market, below potential: the true cost of underpaying in Australian pharma

One of the most difficult conversations in recruitment is telling an organisation that the role it has designed and the salary it has approved belong to two different markets. 

A company may want an experienced pharmaceutical professional with deep therapeutic knowledge, established industry relationships, leadership capability, Australian regulatory experience or a successful record of product launches. Yet the approved salary may be better aligned with someone taking a step up into the role. 

This disconnect is becoming increasingly apparent across the Australian pharmaceutical market. While organisations remain under pressure to control costs, paying below market can significantly restrict access to the people most capable of delivering growth, managing risk and advancing patient outcomes. 

I recently spoke to Pharma in Focus on this. Read on for the full interview: 

Are companies looking to pay below market? 

The honest answer is yes, some are, although it is not always intentional. Salary bands may have been established several years ago and not properly reviewed. A global organisation may allocate a budget without fully considering Australian market conditions. A business may try to replace a departing employee at their historical salary, even though the market has moved considerably since that person was appointed. 

We also see roles expand without the remuneration changing. A position that was previously focused on one brand may now cover multiple products, additional therapeutic areas, digital strategy, market access input, regional stakeholders and people leadership. The title and salary remain the same, but the expectations have become substantially more senior. 

There is also understandable concern about internal relativities. Employers may recognise that attracting a new employee requires a higher salary but worry about what this will mean for existing team members. Existing employees almost certainly know what the market pays. Choosing not to hire at market doesn’t protect them from that knowledge, it just means the gap gets discovered later, and usually at their exit interview. 

What does below-market hiring look like in pharma? 

Medical Affairs provides a clear example. A new Medical Science Liaison without industry experience pays approximately $110,000 to $120,000 base salary, plus a car allowance, bonus and superannuation. An experienced MSL with five or more years in the industry is benchmarked at approximately $150,000 to $165,000 base, again with car allowance, bonus and superannuation. 

A company seeking 5+ years of MSL experience, established key opinion leader relationships, specialist therapeutic expertise and the ability to manage a large interstate territory is therefore unlikely to access the strongest candidates with a base salary of $150,000 or $165,000. It is effectively seeking senior capability on an entry-to-mid-level package. 

These figures are not fixed price tags. Company size, therapeutic area, team responsibility, location, travel, pipeline, technical complexity and the complete remuneration package all influence market value. However, they illustrate the problem when a business wants a proven Medical Manager but has budgeted for a Medical Advisor, or wants a Regulatory Affairs Manager with team leadership and complex submission experience but is offering a senior specialist salary. 

Another common example is a senior pharmaceutical marketing role that requires launch experience, forecasting, P&L responsibility, digital capability, agency management, cross-functional leadership and regional stakeholder exposure but is remunerated at Product Manager level. 

That is not simply a salary problem. It is a mismatch between capability, accountability and reward. 

Is this happening because there is an oversupply of talent? 

Australia’s overall employment market has softened, with the unemployment rate reaching 4.5% in July 2026. However, a national unemployment figure does not tell us whether there is an oversupply of experienced pharmaceutical professionals with a particular combination of therapeutic, technical and commercial expertise. 

Some restructures, regional centralisation programs and changing investment priorities have brought more candidates into the market. Restructuring among some mid-sized biotechnology businesses has released experienced Medical Managers and MSLs, while the movement of roles into regional or above-country structures has also affected local talent availability. At the same time, intense competition for strong Medical Affairs candidates, particularly in oncology, rare disease and immunology, with leading candidates often considering multiple opportunities, exists. 

There may be more candidates for some vacancies, but more candidates do not necessarily mean more appropriately qualified people. A company may receive 150 applications and still have only three people who possess the required Australian industry experience, therapeutic knowledge, stakeholder relationships and leadership capability. Applicant volume and talent availability are not the same thing. 

Are candidates expecting salaries that are too high? 

Sometimes they are, especially when they have been with an organisation for many years and they are on big money and expect their next company to pay them the same or more, which often won’t happen as the new company initially does not see the value as they are not yet proven. 

Candidates often expect a substantial increase simply because they are changing companies, even when the opportunity is a relatively straightforward lateral move. In other cases, job titles can create confusion. A “Manager” in one organisation may be an individual contributor, while the same title elsewhere may involve people leadership, regional responsibility and budget ownership. 

These expectations should be tested respectfully against several reliable sources, including recent placements, live job offers, current candidate feedback, sector-specific salary data and the precise responsibilities of the position. 

However, employers can have unrealistic expectations too. Asking one person to combine medical, market access, commercial, digital, operational and leadership responsibilities does not make the role better value. It makes it broader and potentially more expensive. 

The market rate is ultimately not one candidate’s expectation or one salary guide’s figure. It is the level at which appropriately qualified people are consistently prepared to accept the opportunity. 

Does paying below market rate mean the person you've just hired could be taking the job to pay the bills before something better comes along. Could a below-market hire be a flight risk? 

Yes, although accepting a below-market role does not automatically mean that the person is acting in bad faith. Someone may have been made redundant, completed a contract, returned from overseas, relocated for family reasons or simply need an income. They may accept a package below their preferred level because the role solves an immediate financial problem. 

The risk arises when the salary gap remains apparent after they start and there is no credible path to address it. The employee may enjoy the work and perform well, but they are likely to remain receptive when approached about a similar role paying more. In that situation, the company may have secured an acceptance without securing long-term commitment. 

Paying competitively does not guarantee retention. Leadership, culture, career development, flexibility, purpose, workload and the strength of the product pipeline all matter. But an uncompetitive salary can undermine otherwise positive employment conditions and make it much easier for another employer to attract the person away. 

Organisations should also assume that remuneration differences may become known. Australian employees and prospective employees have a workplace right to share or ask about pay and relevant employment conditions, and pay secrecy terms cannot generally be enforced in modern employment contracts. 

The better approach is to discuss the candidate’s motivations openly during recruitment. Employers should understand why the person is considering the role, what they may be compromising to accept it and what would need to happen for them to see a future with the organisation. 

A vague promise to “review the salary later” is rarely sufficient and most candidates want this documented in an employment contract. Any proposed review should have a genuine date, agreed criteria and a realistic potential outcome. 

What should companies do when market rates create internal relativity problems? 

When paying a new employee at market rate creates an internal relativity problem, the market has not necessarily caused the problem. It has exposed an existing one. The first step is to benchmark the position itself rather than the person. This means evaluating the real scope of the role, decision-making authority, technical demands, leadership responsibilities, scarcity of skills and commercial impact. 

The organisation should then map comparable existing employees against clearly defined salary bands. This may reveal salary compression, where experienced employees are paid only marginally more than new starters, or salary inversion, where a new employee must be offered more than an established team member performing comparable work. 

The answer should not automatically be to reduce the new hire’s offer. Doing so may preserve the internal problem while making the external appointment substantially harder. Instead, the business should develop a remuneration correction plan. The most serious and inequitable gaps may need immediate adjustment, while other changes can be staged over an agreed period. The plan should include clear governance, budget ownership and communication rather than indefinite promises. 

Any review should also examine gender and broader pay-equity implications. WGEA recommends regular pay-gap analysis, transparent salary bands, clear processes for determining starting salaries and documented reasons for appointments above an established range. It also recommends clear criteria for attraction payments, retention payments, bonuses and other discretionary remuneration. 

Where base salary flexibility is genuinely limited, organisations can strengthen the total offering through performance incentives, additional leave, flexible working, professional development, car allowances, retention payments, sign-on bonuses or long-term incentives. These benefits can help, but they should not be used to disguise a significant structural shortfall in base salary. Ultimately, all candidates care most about the base salary, and often say, they are going to the bank for a mortgage, and the bank doesn’t care about non-guaranteed components of their salary package. 

Finally, if the organisation truly cannot afford the market rate, it should redesign the role. It may appoint a developing candidate, remove some responsibilities, provide greater training and support, divide the position into two roles or engage interim expertise for a defined period. What it should not do is retain senior-level expectations, reduce the salary and assume the broader employment market will produce a bargain. 

The real commercial question 

Companies do not have to pay at the top of the market for every appointment. They do, however, need to align their expectations with what they are prepared to pay. A lower salary may be entirely appropriate when the organisation is genuinely open to a step-up candidate and has the resources to develop them. It is far less realistic when the company wants an immediately productive pharmaceutical professional with scarce expertise, strong relationships and a record of delivering in a comparable environment. 

The apparent saving from hiring below market can quickly be absorbed through a prolonged vacancy, a limited shortlist, compromised capability, lost productivity, repeated recruitment costs or an early resignation. 

The most useful question is therefore not simply, “What is the lowest salary at which we can fill this role?” 

It is: “What level of investment will give us access to someone who can deliver what the business needs and who will still want to be here after the immediate attraction of a new job has passed?” 

The best talent is not always the most highly paid. But the best talent usually has choices.