As you know, this has not been a good decade for pharma employment. The combination of patent expirations, thinning pipelines and fewer new drug approvals has prompted every drugmaker - big and small - to toss tens of thousands of people overboard. But so many jobs have been eliminated that the layoff pace is finally slowing, at least according to numbers compiled by Challenger, Gray & Christmas, the outplacement consultants that track monthly changes in each industry.
So far this year, pharma layoffs have totaled 19,076, and this includes the 13,000 job cuts planned by Merck, which is actually eyeing many foreign positions, therefore, swelling the latest tally. Last year, pharma eliminated 53,636 jobs, down from 61,109 in 2009, when annual layoffs peaked. In fact, the 2009 bloodletting was outsized compared with every other year - the next highest annual layoff tally occurred in 2008, when 43,014 industry cuts were announced. Between 2003 and 2007, the number of jobs that were eliminated ranged from about 15,000 to 31,000 annually, according to the firm.
Of course, these numbers are not perfect. As stated, the firm includes overseas jobs to be eliminated by US employers because they are believed to be "economically significant." And some companies cut jobs in dribs and drabs, thereby avoiding having to file notices of large layoffs with government agencies. This means some layoffs do not appear on radar screens. And at the same time, hiring continues as investment is made in certain research, such as oncology. In other words, the tallies are not the last word on job losses, but this does provide a sobering window into the larger phenomenon.
Does this mean that employment may soon stabilize? This depends, in part, on experience and expertise. Sales and marketing jobs are hard to come by. Chemists are not in vogue. Regulatory and compliance specialists are still eagerly sought. This is speaking in general terms, of course, and there are other categories that can be cited as holding potential or, conversely, worsening. And there are always exceptions to trends, as well.
The real issue is the extent to which industry investment is being made in the US as compared with overseas. As more facilities for research and production are purchased, opened and expanded elsewhere - notably, Asia - the demand for pharma people in the US is likely to remain under pressure. So even if the bloodletting has slowed, US employment prospects remain unclear. As they say on Wall Street, hold your seat.
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Related (or unrealted?) fact - it's a really good idea onto 'hold your seat' on Wall Street ... apparently they (a seat on the Exchange)were priced at $3.5 Million USD ... in 2005.
Now THAT is something to hang on to!
Time that we recognize that pharmaceutical companies have learned how to go "virtual" and do it without becoming overly lean. I first learned the term "virtual company" eleven years ago when I joined a start up as the fifth employee hired. The three keys, IMO to a successful virtual company are experience, flexibility and and willingness to learn new areas rapidly. For example, although my area of expertise is clinical R&D, I know much about Regulatory Affaits, thus we were able to delay formal hiring of a VP of Reg Affairs for one year, while I handled most of those chores, saving a six figure income in the process. Also, having a background in academia and pharma, making presentations to large audiences, I was able to use my presentation skills to present our business plan to investment bankers and private equity firms when we were seeking capital. This saved another six figure income for one year, as we didn't need to hire a business development person for the chore. You also have to have people willing to do tasks "beneath their job description". Thus it was not uncommon to see our CEO in the office on a Saturday morning painting a wall.
2) The more traditional aspect of a virtual company is outsourcing everything that you possibly can, the tradeoff being top heavy in management for having a top heavy rolodex, and be willing to learn new roles. For example, I knew little about manufacturing, until it was time to make clinical trial supplies. My boss gave me some phone numbers, and I learned what I needed to in order to get going. At the appropriate time we hired a GMP consultant to bring more experience to the process. Learning was fun as well. I got to choose the capsule colors for our drug supplies, and learned a lot about color, and the psychological influence of capsule color on compliance.
Virtualization is an ongoing process. Thus pharma companies will continue to shed jobs into the future as they discover how virtualization enables them to do more with less.
oii - was turning 'lead into gold and dross into silver' another part of your job description?
That said, the small company experience can be a real growth opportunity AND it certainly fit your multi-faceted (if not schizophrenic) personality .... depending which oii is "in" today.
Observer, not sure why you are casting aspersions on versatility, which is a survival skill in today's market.
To address your question, alchemy was not in my job description. The only gold that I made is when we took a $50 million dollar company in 2000 and sold it for $700 million in 2007.
If that'sm something you do not find in favor, there is a group of like minded people you can voice your concerns to, as linked below.
Have a winning day.
http://occupywallst.org/
I wonder if it's possible to track the size of the industry under this new business model (call it "virtual" operations or Pharma 3.0 or New Pharma or whatever).
You have the obvious numbers = employed full-time by pure-play pharma and biotech companies. But then you have tens (hundreds?) of thousands of contractors and self-employed consultants who may spend years working at a company (sometimes doing the same functions they performed previously as full-time staff), but who are not counted as part of these industry total numbers.
You can certainly argue the benefits of the old business model (almost all full-time staff officially on the payroll). Loyalty, morale, stability, and knowledge retention would be near the top of the list. But unfortunately it doesn't seem like that world is coming back, at least in the short term. So to get an accurate picture of the industry, wouldn't you need to count the "extended" team of contract support organizations, consultants and other contract employees?
Adam, good question. The old business model of bigger is better was premised on the old notion of economy of scale, which now really is diseconomy of scale with massive overcapacity. The problem is one of reverse engineering the growth process. Its is much easier to start with a small, virtual company and grow incrementally than to take a brick and mortar behemoth like a Pfizer or Merck and downsize your way to virtuality. Not to make a play on words, but I would say that the latter task is "virtually" impossible, as you see with the tremendous dislocations happening in the recent wave of massive downsizing.
Trying to get a headcount out of all of this to me is like trying to count the number of heads on a Hydra.
ooi - great passage, a true testimony to entrepreneur attitude!! BTW, this used to be a typically/widespread American virtue...
observer - your (corporate) approach is just in line with Parkinson's law.. (see below).
Parkinson's law is the adage first articulated by Cyril Northcote Parkinson as the first sentence of a humorous essay published in The Economist in 1955:[1][2] “ Work expands so as to fill the time available for its completion. ”
It was later reprinted together with other essays in the book Parkinson's Law: The Pursuit of Progress (London, John Murray, 1958). He derived the dictum from his extensive experience in the British Civil Service.
The current form of the law is not that which Parkinson refers to by that name in the article. Rather, he assigns to the term a mathematical equation describing the rate at which bureaucracies expand over time. Much of the essay is dedicated to a summary of purportedly scientific observations supporting his law, such as the increase in the number of employees at the Colonial Office while Great Britain's overseas empire declined (indeed, he shows that the Colonial Office had its greatest number of staff at the point when it was folded into the Foreign Office because of a lack of colonies to administer). He explains this growth by two forces: (1) "An official wants to multiply subordinates, not rivals" and (2) "Officials make work for each other." He notes in particular that the total of those employed inside a bureaucracy rose by 5-7% per year "irrespective of any variation in the amount of work (if any) to be done."
In 1986, Alessandro Natta complained about the swelling bureaucracy in Italy. Mikhail Gorbachev responded that "Parkinson's Law works everywhere."[3]
oii - I had no intention of splashing you with holy water (second def. of 'aspersion); I was only overcome by the number of experiences that the "oii"-handle has claimed. (There have been two of you, at least, if I recall properly, perhaps more so I may simply be confused. Hence the reference to schizoprenia - meant in good humor.)
I do not however intend to join those folks in lower New York you post about - in multiple threads here. (An obsession perhaps?) Actually, from a document I was just given to review today, what I need to do is find a way to rasie my current rates - apparently we are just giving above market service at 30 pct below market 'expectations.' The implied generosity makes me almost ... depressed.
No problem, Observer. I've been thinking about changing my handle, and when I'm opining on a subject it's difficult to distinguish me from the pseudo OII, but I'm also the OII who mixes opinion with fact. For example, I'm the same OII who posted in another thread about the scandal that is Depo Provera and its overuse in African and African-American women in its relationship to HIV. I doubt you'll see that from my counterpart.
At least the Wall St protests have taken on some humor. Today, Alec Baldwin joined the crowd, saying "A little more Tao, a little less Dow". As you, Mr Baldwin has recently taken a vow of poverty, and is taking a leave of absence from "30 Rock" to live in a Taoist monastery.
Do you think the industry would ever embrace a wave of spin-offs and divestitures? (Not talking about the slow drip from a few companies in the last few years.) As you say, OII, it does seem that the last generation of mergers was all about bulking up, primarily for the sake of bulking up (and hitting extremely short-term financial milestones). The long-term effects now seem ... less than what was hoped for, shall we say?
Would the reverse model have positive effects? If big companies spun off labs and R&D with some operating capital into new companies, would we see a blossoming of productivity? Some of the spin-offs would fail, just as start-ups often do. But some would succeed and presumably feed the (smaller) big companies with more licensing and co-promotion opportunities.
Or is this a pipe dream? Will the drugs and deals in the pipeline now be enough to stabilize the industry and get things back to the new "normal"?