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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline

« An Impressive Nanolist of Nanocitations | Main | More On the GSK Layoffs »

June 10, 2008

GSK: Money-Green Outside, Pink-Slip Inside

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Posted by Derek

Update: GSK is indeed wielding the ax today and tomorrow. I'm hearing that that the smallest cuts are around 40% of the entire research staff at the various sites. This is big, and it's bad. . .

GlaxoSmithKline has been going through some sort of mid-life crisis recently. Their chairman, Jean-Pierre Garnier, just retired amidst the mutter of angry shareholders, for one thing. And the company has been splashing out on some very flashy acquisitions, such as the Sirtris deal which has just now completed. This is all going on against the backdrop of the Avandia disaster, and a perceived drought of current clinical successes.

Now the company is cutting their own head count in research, to what sounds like a pretty serious degree. There have been substantial cuts at their sites in Italy and the UK, and the Research Triangle and Pennsylvania sites are getting it even harder, from what I'm hearing. Some chemistry areas are losing more than half their people. I believe that today is the day that a lot of people are hearing whether they stay or go, and I feel bad just hearing it from a distance, having seen that stuff close up a few times myself.

The proximate cause of all this turmoil is probably the loss of all that Avandia revenue, although that may have just advanced the timetable on some decisions that the eompany was going to make eventually no matter what. Many GSK scientists are (understandably) feeling as if they’re being ditched in favor of a bunch of people whose main advantage is that upper management isn’t so familiar with them yet.

Whether that’s true or not, it’s a tough one to refute. There is a persistent “grass is greener” mentality in the drug industry. Perhaps that’s partly because, on an individual basis, the grass really is often greener. The best way to work your way up in the industry, for the majority of scientists, is to jump ship once in a while, which keeps you from being pigeonholed or taken for granted in your current company. (A less charitable view, accurate in a few cases, is that it’s in some people’s best interest to leave before everyone else catches on to them).

And on a company-wide level, it’s hard not to think of everyone else as being at least a little more competent than your own shop is. That’s because you see the inevitable bozo mistakes of your own workplace up close, whereas you don’t get such good seats for the ones happening elsewhere. And the side that all drug companies show to their competition is a bristling pile of patents and confident press releases about their mighty drug pipelines. You know, looking at your own company’s public face, how much of it is real and how much is bravado or wishful thinking. But it’s hard to keep in mind that the same goes for everyone else, too.

I don’t know how much this effect is contributing to what’s going on at GSK. After all, some of the deals that the company’s making are for specific development compounds that they didn’t have in house. But I’m pretty sure that there are researchers over there who are thinking about whether they could have gotten a sirtuin program off the ground a few years ago, like the one they just bought. Or what would have happened to them if they'd tried. . .

Comments (41) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. T on June 10, 2008 9:45 AM writes...

This may be redundant after your update, Derek, but is this limited to PhD level scientists, or are BS/MS associates involved in the cuts as well?

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2. emjeff on June 10, 2008 10:08 AM writes...

I'm writing from inside the belly of the beast. Cuts in Cardiovascular are approaching 70%, and are at all levels. It's grim here today...

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3. processchemist on June 10, 2008 10:08 AM writes...

Some GSK folks I know in october (after the launch of the Shangai CEDD) were stating that their positions were solid as rock...

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4. Anonn on June 10, 2008 10:21 AM writes...

The cuts at Harlow, UK are across the board from directors to associates. There are 50 jobs for 115 chemists.

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5. Anon on June 10, 2008 10:48 AM writes...

I guess GSK's executives were not paying attention when someone penned the wisdom that "no company has ever downsized its way into greatness."

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6. SRC on June 10, 2008 12:01 PM writes...

My older son is a natural for science, but I'm not encouraging him, for precisely this reason. Scientists are the last to be rewarded when things are going well, and the first to get the boot when hard times arrive. Marketers, the other way 'round.

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7. Mark M on June 10, 2008 12:15 PM writes...

SRC: I am not sure how many of us "chose" science. I was born a scientist. You do what you love in this life, even if it is not the most lucrative, stable path.

I will encourage my kids to pursue subjects they are most passionate about while teaching them the reality of keeping current in their skill set and being able to promote their abilities to prospective employers.

This is why I read Chrispy's remarks about dissuading people from getting a PhD with a grain of salt. If your desire is to become the best at something, sometimes that means advanced study. Starting salary was not foremost in mind when I applied to graduate schools.

What is happening at GSK is just par for the course now with big pharma. Opportunities in discovery are increasingly with the smaller firms who serve to feed big pharma's pipeline. I disagree that the majority of discovery jobs have left the country. I am a recruiter now, I should know.

And for the record, I was once one of the first to go when our firm downsized. I'll never forget the gleeful tone of the CEO in her update to the investors that "we have closed down the discovery lab!" Talk about feeling underappreciated.

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8. molecular architect on June 10, 2008 12:45 PM writes...

Mark M: I don't share your enthusiasm for the future of discovery jobs with small firms. The severe resource-limited nature of small biotech/pharma will seriously limit career options for all chemists but particularly for PhDs over 45. Small companies are often unable and almost always unwilling to pay for experience in discovery (they will pay big bucks for development, clinical and business development) yet they can't succeed without it, a major reason for the high failure rate in that sector.

I too feel like I was born a scientist and was happy being one despite the unfair economic rewards. The research industry is undergoing a fundamental shift that will leave most PhDs unemployable in their chosen field. Based on that, I do actively discourage young people from pursuing scientific careers. Their bright minds can be put to equally creative work with higher rewards outside of science. If they are really committed to science, they should pursue the MD/PhD or another field involved in late stage development or clinical research where they will be much more employable.

Look at yourself. You say you were "born a scientist", yet you cannot make a living doing science and now work as a recruiter

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9. SRC on June 10, 2008 1:00 PM writes...

Mark, I fully agree. I too was born a scientist, starting with a chemistry set at age 9, built a lab in my garage, and worked through an entire college chemistry lab course before high school. So I was an obligate scientist from the get-go.

Nevertheless, I recognize that if one has any volition in the matter (OK, unlike either of us), pursuing a career in science is not entirely rational, and is probably better avoided. It's a bit like professional sports in some respects.

Contrast, say, accounting. If a start-up fails, an accountant can in essence walk through a business park knocking on doors, asking if that company deals with money, and could use an expert's help. He can, if he wants, get a job (perhaps not his ideal job, but a job nonetheless) within the day.

Chemists, especially of a certain age, not so much.

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10. colorado chemist on June 10, 2008 1:14 PM writes...

Just because you were born to be a scientist doesn't necessarily mean you'll be good at it. Success is a function of many variables.

Good-paying and secure jobs will always be a scarce resource for which there will be strong competition.

Excluding the case of sycophantic statement-of-purpose letters for Grad School, "passion" and a buck-fifty will get you a Diet Coke.

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11. Mark M on June 10, 2008 1:15 PM writes...

MA: I am still a scientist and I make my living supporting pharma, just not at the bench at the moment. And this is by my own choosing, not b/c I cant find a job. I do plenty of science these days, trust me. For the record, I wouldnt have fared well in this occupation (recruiting) if I hated it. I am glad my training gave me the tools I needed to continuously provide for my family.

The notion of discouraging someone from doing something they are passionate about is ridiculous and tantamount to telling your offspring they shouldnt marry the person they love because they are outside of your race. People do what they love. You can inform them of market conditions and trends, but that's where it stops.

I know what I see in the field and stand by my assertion that non-big pharma firms are where the employment opportunities will be. The med chem salaries my small cap clients offer are typically not that disparate from those of big pharma. The failure rate for smaller firms in my mind is usually due to one of 2 things: high risk associated with the innovation work on unvalidated targets OR improper guidance at the executive level (eg, management pushing a compound forward just to meet a milestone that they know/dont care will fail in Phase II). So, I disagree that smaller firms not paying big pharma wages to medicinal chemists is the source of their failure.

Employment opportunities for scientists over 45 is a whole separate issue. Age discrimination is real and occurs at big and small firms alike. Life is much worse in this regard in the advertising sector I am told by my fellow recruiters.

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12. anon on June 10, 2008 1:23 PM writes...


Apparently, this may have been foreshadowed by someone back in October 29, 2007:

see http://www.cafepharma.com/boards/showthread.php?p=1969761


Anonymous

Posts: n/a
Default An honest insider post, the REAL future at GSK.....
I have had access to executive level discussions regarding the GSK layoffs. I am posting this information from an anonymous "business center" computer location. I won't say anymore, except that my credibility is legitimate.

I understand that rumor, speculation, and misinformation is running rampant right now through out the entire GSK organization. I feel that the lack of communication with our sales force regarding the true intentions of this company is regrettable. I personally know quite a few of the excellent employees of GSK that will be terminated.

I am dismayed that executive level management has so little regard for the employees welfare. Yes, I remember the Zantac Hawaii trips! This is why I am being honest with you.

GSK is planning a second round of layoffs that will occur immediately before second quarter earnings are announced in 2008. Projected sales forecasts for Avandia family over the next six months are dire.

The current layoff scenario has been structured to appease shareholders and Wall Street analysts.

The layoff in 2008 will be attibuted to the new management team. They hope to be given credit by the Street for taking decisive action in the face of declining revenue. This may shore up the stock price at that time.

So you ask, "Why not just lay every one off now?" There is a good answer. The GSK Senior Executives very closely studied the Pfizer layoff from last year. Do Executives from different companies talk with each other? Yes, they do. Pfizer management noted that after the layoff, a significant portion of the sales organization was demoralized. This resulted in many subsequent resignations as Pfizer sales people found new jobs on their own. This resulted in Pfizer not having to pay these people severance packages. The net: Pfizer saved a tremendous amount of money by having a layoff followed by enhanced attrition.

GSK is planning the same situation. This is why the current layoff in not as large as it really needs to be. Two smaller layoffs is more cost effective than one large one.

I have been honest with you. If you survive the current layoff, there is no guarantee you will survive the next one in June 2008. Plan for your future accordingly.

I realize on Cafe Pharma some people will bash this information as false. However, you might be surprised how many people in VERY senior management read this board. They need to know that some managers still care about the employees. The point is, do what is best for you and your family.

I have to admit, it is sad to see what has happened to this once great company. I really hope GSK can recover, but nothing is guaranteed. Best of luck to all of you.

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13. Jose on June 10, 2008 1:26 PM writes...

"Good-paying and secure jobs will always be a scarce resource for which there will be strong competition."

"Secure?" are you joking? Or simply so brilliant that you are somehow immune?

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14. Now unemployed on June 10, 2008 1:35 PM writes...

Just got the pinkie. As I'm writng this out, the security/transitions teams are heading this way to clear me out

goodbye

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15. x-gsk on June 10, 2008 1:43 PM writes...

I recently left GSK as I was hearing the drum beat of cost cutting and staff reductions. It's painful to hear what my former colleagues are facing today and I fully expect I will be hearing the same drum beat at my new company at some point. None-the-less, I think it's important and fair to understand that GSK, like all Pharma, are businesses that only exist because they make money. No money, no research, no jobs. What GSK and the entire industry are engaged in is a hunt for a viable business plan. What used to work, isn't working any longer. It really SUCKS that what once seemed like a stabile and rewarding career in drug research may only take me half way to retirement, but I'm not sure why I should be any more entitled to permanent job security than folks in the maunfacturing or IT fields who lost their jobs over the past decade.

It is fair to argue that others should be cut before scientists, but in the end, revenues are not supporting the expenses and GSK (and the industry) is headed for the tank. At this point I've learned that no one is above market forces and the need to create value. The only way I can see a research pharmaceutical industry coming back with the robustness of the late 90s is if I/we can create the marketable drugs to pay our salaries. It's been disappointing to me that we have not accomplished enough of that to avoid the current down-sizing.

All that being said, my heart goes out to those from GSK (and other companies) who are being rewarded for their commitment and loyalty to drug discovery with a push out the door.

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16. Clark Kent on June 10, 2008 2:18 PM writes...

GSK is not short on money. They are just choosing to spend the money outside the company. Hence the 720 million dollar cash purchase of Sirtius. If GSK instead spent the money internally, they could have kept everyone they are laying off today employed for >3 years.

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17. milkshake on June 10, 2008 2:21 PM writes...

my sympathy goes to the bench scientists who lost their jobs. But in the long run it may turn out for the better - who wants to work for a company that treats its talent like a lawn mulch?

The future of medchem research is not in the big pharma. We got quite a few of ex-Merck and ex-Pfizer people here at the institute working in drug discovery - and I dont think they would want to go back to industry.

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18. satan on June 10, 2008 2:33 PM writes...

This is what happens when MBAs and other sociopathic losers run any company. Unfortunately most traditional industries in the US and the western world are affected by these sociopaths. Some may object to that term- but let us call this particular evil by it's real name.

They infest companies, destroy the existing good stuff, stop real innovation, bring in their helpers, pillage it for their bonuses, kill the host and move on - not unlike viruses. However most people, including shareholders, do not see it for what it is - parasitic infestations. They still bask in the BS about creative destruction in capitalism.

Wake up, this is about oligarchy, extreme short term profit for a select few and control. In the end it will ruin everyone, including those who initially profited from it.

But I guess ultimately human beings get the society they want and deserve.

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19. Kay on June 10, 2008 2:44 PM writes...

If there weren't so many well-financed, stable startups, I would wonder where the compounds will come from.

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20. CMC guy on June 10, 2008 3:45 PM writes...

I too offer sympathy and best wishes for anyone caught in this mess. Events like this are sad for all of us.

I somewhat agree with #17 satan and #12 anon as to root causes as pharma has shifted over last 20 years from science/patient based focus to prime money motivation. I don't think small companies can absorb all the recent laid off workers, nor compete with off-shoring of R&D. If someone has a passion for sciences, and chemistry in particular, not sure I could honestly encourage their pursuit because just telling the facts is discouragement enough.

Kay please let everyone know where these well-financed, stable start-ups are so people can apply. I think the realities of today are that there are not many out there who would fit that description much less have strong (small molecule) med chem programs. Biotech most are one-trick-ponies and have been very cyclic about building up research for a few years then cutting/eliminating to finance continued development to an approval/survival point.

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21. SRC on June 10, 2008 3:58 PM writes...

I'm sorry to hear that, Now Unemployed.

Best of luck, and I hope you can change your handle back soon.

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22. DrSnowboard on June 10, 2008 4:02 PM writes...

Does look bad. And the scientists are unlikely to have contributed to this bloodletting in any direct way.
Question is...is it an acknowledgment that the CEDDS haven't 'worked' or is it that the next newsflow moment has occurred before there's anything positive to associate with the CEDD restructuring? Is it just the snipping off of the 'satellites' at last?
It was clear to everyone there at the time that the 'upsurge' in GSK productivity could be attributed to events that happened pre-CEDD. When was Tykerb discovered...?
From an outside POV (disclaimer: I left GSK post 2nd merger) you'd have to ask what are the new Head of Discovery's Drug discovery credentials? He's a medic, he was involved in NOS early, banging cpd into patients with little hope, producing an effect that I believe wasn't supported by longer, more detailed trials.
If medics are king in the new organisation, they won't care a rats arse whether their cpd is internal sourced or external. And the house broker won't care where their commission comes from for stating the obvious..
Let's hope Baxter converts some of the pipeline into winners, otherwise the whole company will become a shell.

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23. Jack Friday on June 10, 2008 4:02 PM writes...

Good luck to all the displaced.

The FDA are recruiting.

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24. eugene on June 10, 2008 5:44 PM writes...

"The notion of discouraging someone from doing something they are passionate about is ridiculous and tantamount to telling your offspring they shouldnt marry the person they love because they are outside of your race."

Yes, because when parents tell their kids to become a doctor or go into business, because there isn't as much money or job prospects for the middle aged in chemistry, what they are really telling their kids is not to talk to the non-white (or whatever your race is) girl because their child might marry them.

It's a terrible analogy that is completely false and makes your argument suspect. And I say this as someone who chose to follow my passion into chemistry. But I'm fully planning on dissuading my kids from it. I tell the students I teach now that the outlook is uncertain. They should know what the real score is.

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25. Jose on June 10, 2008 6:01 PM writes...

I'd love to be an astronaut! and and Jacques Cousteau! and and Indiana Jones, too!

These "career aspirations" have about the same probability as continual med chem employment; this is called "reality." No amount of cheery banter from a headhunter is going to the change the truth of mol architect's assertion that, "The research industry is undergoing a fundamental shift that will leave most PhDs [and many others] unemployable in their chosen field."

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26. eugene on June 10, 2008 6:58 PM writes...

The ACS careers website has a quote from someone at GSK and their picture as the first thing you see on the website, saying: “Over the past 20 years, ACS Careers and C&EN have helped me find my ideal job and given me an advantage with their personalized career development assistance.”

It's actually pretty ironic. Over the last year I came to the conclusion that some posters were right and that there is an overproduction of chemistry PhDs in the US with continuous news like this. Still, I believe making immigration easier for PhD holders (including chemists) is a good policy in the long run. They are the ones who might create jobs for those already here.

Then we might end up with a situation like in Canada of course, where a recent study found that visible minorities far outnumber the majority in terms of degrees in any field. And this is for every single minority including blacks (African-Canadians sounds foolish) and hispanics; the disadvantaged minorites here in the States. Whites have the least degrees percentage wise but are still well off. Considering how Canada's economy is doing, it seems it was a smart choice to attract educated immigrants and invest in education. There might actually be a brighter future for chemists there. Something I didn't think was true five years ago.

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27. Mark on June 10, 2008 8:02 PM writes...

"Considering how Canada's economy is doing, it seems it was a smart choice to attract educated immigrants and invest in education. There might actually be a brighter future for chemists there. Something I didn't think was true five years ago."

Canada has a huge number of immigrants with degrees because Canada's immigration system doesn't require immigrants have an actual job offer, just the credentials. (unlike the US)

The result is a huge number of educated immigrants working in jobs that don't utilize their degrees.

If you think chemists have a bright future in Canada, you'll be in for a rude awakening. Most chemists I graduated with from Canada are either working in the US or abandoned their chemistry degree and are working in a non-science field.

Sorry for the thread hijack.... my best to all those GSK guys now looking for jobs.

M

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28. BCP on June 10, 2008 8:43 PM writes...

As a former Glaxo employee, this is very sad to see.

What I am intrigued by though is the complete radio silence from GSK on this. I would have thought that cuts of this magnitude warranted some sort of public disclosure

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29. Anonymous BMS Researcher on June 10, 2008 9:00 PM writes...


Having seen this happen close up myself, I can sympathize! Also it seems like when layoffs hit BMS folk the rank-and-file are the last to know. Once my wife heard about an upcoming round of layoffs at BMS before *I* did.

Cafepharma sometimes does have good inside info in and among the flamewars about whose VP is the worst, but the signal-to-noise ratio is so atrocious that I can only stand to read it once or twice a month.

But jumping ship isn't always the answer either, I know somebody who left BMS at the worst of our Plavix patent debacle -- and this person's first day of work was the day their NEW employer's stock tanked because their top pipeline compound got killed due to a safety issue.

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30. S Silverstein on June 10, 2008 9:05 PM writes...

What GSK and the entire industry are engaged in is a hunt for a viable business plan. What used to work, isn't working any longer.

I disagree. When smart and biomedically experienced people ran pharma, pharma was productive. When non-biomedical business and IT poseurs run pharma, this is the result.

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31. eugene on June 10, 2008 10:15 PM writes...

Ah, you might be right Mark about no opportunities for chemists, we'll see.

It's true that a lot of the educated immigrants are under-employed (not all of them), but they are employed. And they are not moving back apparently. Well educated people are more likely to be entrepreneurs in the high tech industry.

Anyways... my best as well to all those at GSK in finding a new job.

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32. Dan on June 11, 2008 12:24 AM writes...

Before placing all the blame on non scientists for pharmas trouble, the biggest asshat managers I've seen where chemists themselves. Whether knowingly or not they demoralize and fill their departments with cynicism. I was laid off last year and now have a job with a small company doing custom radiolable synthesis. I have truly never been happier and more at ease with my job. Terrific owners, no managers, no meetings, it's great. Good luck to you former GSK folk, yo will find something better.

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33. KB on June 11, 2008 2:31 AM writes...

We really feel for all of you at GSK. So much for the bight new Witty dawn.

Whilst not entirely the cause of these layoffs I wonder if Steve Nissen feels ever the slightest regret for his shoddy hacket job on Avandia. Everybody knows that it's not as bad as he claimed but the damage is done now and thousands of people will be without a job. People with kids and the like. Despite GSK's known shortcomings I really do think egomaniacs like Nissen should be reminded of his impact. Git.

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34. Andy on June 11, 2008 2:56 AM writes...

I'm a doctor and have big pharma giving me free food all the time. Trouble is, the products are SO forgettable these days. The main marketing points seem to be "our study showed a 0.00001% benefit of out drug over the other one" and suchlike. The new diabetes drugs are real yawn material and arent allowed to be used as first line therapy, so we end up using them on patients whose problem is not so much lack of efficacy of exisiting drugs but issues like compliance and lifestyle.

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35. Mark on June 11, 2008 6:30 AM writes...

Chemistry World magazine is working on a report about the layoffs - if anyone wants to share their experience, on or off the record, just get in touch at chemistryworld@rsc.org

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36. Anonymous BMS Researcher on June 11, 2008 6:55 AM writes...


So far GSK has only made public acknowledgment of about 350 layoffs in the current round:

http://www.reuters.com/article/ousiv/idUSL11745520080611?sp=true

I dunno whether this means rumors are exaggerated or GSK whether more bad news is yet to come.

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37. LNT on June 11, 2008 7:18 AM writes...

All I can find in the media are reports of 350 jobs being lost, which accounts for 2% of R&D. Where did the 40% figure come from? Maybe certain departments are being cut by 40%?

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38. weirdo on June 11, 2008 9:11 AM writes...

350 is 2% of the entire workforce, not R&D.

My understanding is that the cuts this week are all Discovery (R only -- and mainly chemists), and 350 could very well be ~40%. Discovery research at GSK is a lot smaller than it used to be.

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39. Retread on June 11, 2008 10:04 AM writes...

#34 Andy

"so we end up using them on patients whose problem is not so much lack of efficacy of exisiting drugs but issues like compliance and lifestyle."

I would have loved to have drugs which worked no better but improved compliance (because of fewer side effects) for my patients with epilepsy from '66 -'00 when I was in training and practice as a neurologist. For reasons unknown at the time (and probably unknown still) there is an inverse relationship between sleep and convulsions. Sleep protects, lack of sleep worsens the condition. There were no anticonvulsants at my disposal which were not sedating to some patients (perhaps that's the way they work)-- Celontin was the worst. Patients couldn't stand the sleepiness, went off the meds, convulsed, swore they were taking their pills (we didn't have blood levels in the 60s and part of the 70s), so we'd use another (usually more toxic) drug and the cycle would repeat.

With regard to 'me too' drugs, there was a period of SEVENTEEN years during this time when not a single new anticonvulsant was introduced in the USA. My experience (admittedly not double blind and placebo controlled) was that each new drug would end seizures for one or two patients who previously had lousy control. It's possible that this was just regression to the mean or the improvement in epilepsy control which occurs in just about everyone with age, but I doubt it -- it happened too many times

So keep pumping out the drugs guys.

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40. Mark on June 11, 2008 11:18 AM writes...

#38 weirdo

GSK insist they have 17,000 people (or thereabouts) in R+D. Entire global workforce is > 100,000

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41. george on June 27, 2008 12:28 AM writes...

http://labjabpharma.freeforums.org/

I have Just created a forum (message board) specifically for scientists in the pharmaceutical industry to anonymously discuss anything related to their work (technical stuff, lay-offs, re-orgs, silly mgt stuff, etc).

I couldn't find any forum (not blog) like that.

Please spread the word (or point me to an existing forum) so that we can get alot of folks talking.

Thanks
George

http://labjabpharma.freeforums.org/

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Another Use for Xenon