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February 27, 2006
But At My Back I Always Hear. . .
Posted by Derek
I have an interesting article from Forbes to point out tonight: one of those lists of the best-selling drugs in the US, and a corresponding list of the fastest-growing ones.
A few things stand out. For one, five of the top ten drugs are showing declining sales. I suspect that this is close to the historical average, since some of these big sellers will always be things that are past their (gigantic) peak. Another striking feature is that the ten fastest-growing drugs include three antibodies and another protein. We small-molecule people tend to overlook these products because we're not the ones who do the research on them. But they're very big business indeed, and getting bigger every year. It would serve us organic chemists well, I think, to come up with ways that we can add something to the antibody field, because I think that we're going to want to be its friend.
And that brings up a conversation I was having with a colleague the other day. He was pointing out the huge amount of contract work that's being done in China and India these days. A lot of large and small companies are profitably outsourcing their chemical grunt work, and a lot of small firms outside the US are profitably taking it on. That got me to thinking again about a feeling that I just can't shake: that we medicinal chemists, individually and collectively, need to make sure that we are doing things that other people can't do for us.
Fifteen years ago, you could make a living banging out huge combichem libraries, but you can't do that any more. Ten years ago there were a lot of small outfits in the US that were doing custom synthesis, taking on all kinds of nickel-and-dime work, but if they've survived until now they've done it by branching out into things that the Indian and Chinese firms can't undercut them on. I think that the methyl-ethyl-butyl-futyl type of medicinal chemistry work is perhaps about to be loaded into the same hopper.
So, think about what you're doing for a living, fellow chemists. Is it something that someone easy to locate could do for a lot less money? It had better not be. Failing that, you'd better start to pick up some impressive new reasons to justify your paycheck.
Comments (22)
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1. Kay on February 28, 2006 6:11 AM writes...
Your final paragraph contains advice that's appropriate for the entire R&D 'engines' of the larger companies. The beautiful people in marketing cannot be offshored, however. Going forward, we will have three departments only: in-licensing, Phase II and III development, and marketing.
Permalink to Comment2. tom bartlett on February 28, 2006 8:51 AM writes...
The out-sourcing fad is certainly worrisome. In a sensible world, the government would tax the hell out companies that send jobs overseas. But don't hold your breath.....
Permalink to Comment3. Derek Lowe on February 28, 2006 9:14 AM writes...
Tom, I'm one of those free-trade guys, so outsourcing per se doesn't bother me that much. The costs of doing business will gradually increase in the second country as it gets its economy together. My hope is for higher living standards around the world - so they'll be able to afford what we want to sell them - and I think that the free movement of goods, people, and services is key to that.
But it does keep you on your toes, doesn't it. . .
Permalink to Comment4. POCl on February 28, 2006 9:57 AM writes...
One wonders whether chemists will be allowed to keep on our toes, in light of what has happened recently at P&G and J&J...
Permalink to Comment5. tom bartlett on February 28, 2006 10:57 AM writes...
Derek: you have more faith in the market than I do.
The other thing I worry about is what happens if the dimwits-in-charge start moving towards price regulation....
Permalink to Comment6. Marc on February 28, 2006 11:00 AM writes...
Tom, the problem with taxing every job going out of your country is that other countries will tax every job going into yours.
Anyways, forcing companies to retain R&D departments that are uncompetitive will just get them slaughtered on the international market in the long run.
The trick, as Derek is pointing out, is to find something that you are good at and be better at it then most people.
Does money go where the talent is, or is it the other way around ?
The good news is that the periodic table looks the same in Hindi
Permalink to Comment7. Tim Mayer on February 28, 2006 11:14 AM writes...
Gee...this is something we don't know? Maybe the R&D departments in the drug field haven't had to face this too much, but in the industrial chemical area we've been getting hammered by it for the past twenty years. First NIMBY enviromental laws, then out-sourcing. But I do have hope; I read where paralegal work is being sent to India. When the job displacment hits the legal field, all heck will break loose.
Permalink to Comment8. milo on February 28, 2006 11:59 AM writes...
Here are some thoughts:
I think that it is fair to say that a lot of industries, not just the chemistry based ones, are feeling the effects of off-shore out-sourcing. Look at the software industry, programmers are a dime a dozen in other countries. Like Marc said, the periodic table, and computer code, is the same all over the world.
I am still a postdoc with aspirations of an industry position. I have reached the conclusion that should I find a job, it will not be "secure" (in the 20 year career way).
One has to wonder what this mass out-sourcing is doing to our nation with respect to our slipping status in the world of science. It will be interesting to see what the industrial landscape will look like in 10 years.
Permalink to Comment9. John Thacker on February 28, 2006 12:30 PM writes...
"One has to wonder what this mass out-sourcing is doing to our nation with respect to our slipping status in the world of science."
I'm not sure what you're saying the cause and effect is. Certainly, though, a lot of the mass out-sourcing is because India and China have raised their living standards enough so that very intelligent people who come here to be educated, rather than staying here and living, go home and live there.
Eventually China and India were going to break out of their self-imposed straitjackets. In the long run, of course, it's good for everybody. In the short run, it takes a while for the salaries to rise over there. (Though it is already happening-- the salaries in India for offshoring type work are already going through the roof.)
If you prohibit outsourcing, then you merely result in other companies (often those based totally in China and India) taking advantage. These are all the inevitable effects of China and India finally modernizing and educating their people, but we're still early enough in the process that wages haven't caught up. Wages match average productivity in the country's industry in the long run, but jobs switch away based on marginal productivity. So until all of China and India catch up to their leading edge, wages will lag.
Permalink to Comment10. tom bartlett on February 28, 2006 12:44 PM writes...
", a lot of the mass out-sourcing is because India and China have raised their living standards enough so that very intelligent people who come here to be educated, rather than staying here and living, go home and live there."
In principal, people, then, might choose to live in the "best" place. I often consider emigating, myself.We have limited social services here, poor pre-university education, and we are run by a bunch of kooks who would criminalize condoms if they could get away with it. Why can't we be more like europe!
Permalink to Comment11. JimW on February 28, 2006 1:26 PM writes...
I'm personally in the antibody/large molecule side of the industry. Some of the technology I'm real excited about is the conjugate pairing of small molecules with a protein/antibody specific delivery system. Let's see more of that! In theory, the idea's great... maximizing the (chemotherapy) agent while decreasing the toxicity.
Permalink to Comment12. UndergradChemist on February 28, 2006 2:51 PM writes...
Er...I'd rather not live in Europe, seeing as they have huge taxes, a rather strong bent against capitalism, and crazy politics left and right. With all the faults of the US, I'd rather keep them and live here in relative freedom and safety.
Permalink to Comment13. sciwriter on February 28, 2006 4:50 PM writes...
Just thought I'd throw into the mix the deal Wyeth struck last month with the Indian CRO GVK Biosciences...they are setting up a discovery research site and hiring 150 synthetic chemists to do dedicated work for Wyeth. Probably the first major (public) deal between a big pharma and an Indian CRO, but certainly not the last.
Permalink to Comment14. Jake on February 28, 2006 5:29 PM writes...
The juxtaposition of
The other thing I worry about is what happens if the dimwits-in-charge start moving towards price regulation....
and
Why can't we be more like europe!
is amusing. There ain't no such thing as a free lunch, and lots of high-paying medchem jobs and free healthcare for all don't go together. If it's any consolation, nationalized healthcare will probably drive drug companies more toward un-covered lifestyle drugs, which are probably less prone to outsourced trials (how many third-worlders get diagnosed with the anxiety syndrome du jour?).
Permalink to Comment15. reuben on February 28, 2006 5:30 PM writes...
Perhaps you chaps are missing it altogether, out-sourcing is not where we in India have an advantage. The advantage is when Indian (and perhaps firms in China too!) own the entire discovery process, the west does have brilliant skills, but will lose in the next 15 years to small agile discovery firms in India. Rather than wringing your hands and depending on hearsay, pack your bags and visit Asia, it will scare the heck out of you.
Permalink to Comment16. Derek Lowe on February 28, 2006 7:26 PM writes...
Reuben, I have to disagree with that projection. India and China are never going to "own the entire discovery process", because it isn't something you can own. There are plenty of "small, agile discovery firms" here, too, and being in India doesn't give them any particular advantages when it comes to finding and developing drug targets.
Like it or not, the advantage that India has now is lower labor costs and (in some cases) less regulation. Those gaps will close. Then we'll have what I was talking about in an earlier comment: a level playing field, with small and large firms in India, small and large ones in Europe and the same here in the US.
And in case you're wondering, I have friends in the Indian and Chinese research community, so I'm not completely depending on hearsay.
Permalink to Comment17. JimW on February 28, 2006 7:54 PM writes...
It's not just India or China.. Amgen announced a few weeks ago that their newest >$1 billion dollar biologic manufacturing plant is going to Cork, Ireland. While the move overseas for discovery may be slowly happening, it's already happened for commercialization.
Permalink to Comment18. Harry on February 28, 2006 7:56 PM writes...
I can't speak for all the other job-shop chemical companies here in the US, but for my part, we're staying competitive by paring off products as they become commoditized, adding some highly specialized , flexible equipment and taking on small projects that would be uneconomical for larger firms to take on. We've also done a lot more marketing and face-to-face contact.
That said- we're making efforts to find reliable partners in India and China to work with on larger projects.
Only the agile will survive the next shakeout in the industry.
Anyone interested in looking at my company's website, please e-mail me for the URL. Due to spambots I won't post the URL or company e-mail here. (Please pardon the advertising).
Permalink to Comment19. Harry on February 28, 2006 8:00 PM writes...
Oops. Sorry- truncated my post somehow- the e-mail is: breamfisherman@yahoo.com.
Permalink to Comment20. MikeT on March 1, 2006 9:13 AM writes...
So all this basically makes the synthetic organic jobs we're competing for even more competitive. Man, why didn't I do research with a "famous" scientist? Career aspirations turning to a hobby.
Permalink to Comment21. steve on March 1, 2006 8:58 PM writes...
JimW: Thanks for inadvertently answering a question I asked back on the thread about attaching antibodies to gold particles--if you can put a gold particle on a selective antibody, why not a cellular poison or some other payload?
On offshore outsourcing: The trick in any large-scale movement of relative input prices is to position yourself to be complementary, rather than substitutable, to the input whose price is falling, and substitutable, rather than complementary, to the input whose relative price is rising. Hence, companies/professions that substituted computing cycles for labor and energy have done pretty well due to Moore's law (they are complementary to cheaper computing). Cheaper chemical analysis and synthesis presumably means that more things can be tried more quickly, so those who can take advantage of that will prosper.
Permalink to Comment22. Dave on March 3, 2006 11:10 AM writes...
Steve, Amgen does have an antibody-drug conjugate program as do many others.
Genentech played around with the idea for many years as well (trust me I know since I worked for them prior to joining Amgen).
Check out Seattle Genetics for an example of an up-and-comer with an essentially exclusive focus on this type of approach:
http://www.seattlegenetics.com/tech/adcf.htm
There are at least 3 approved antibody-drug conjugates on the market and many more in the clinic...
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