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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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July 2, 2008

More Pfizer Layoffs?

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Posted by Derek

Unfortunately, I’m getting reports of significant chemistry layoffs coming this fall at Pfizer’s Groton facility. Rumors of all sorts seem to be going around: one indication is that this is going to hit both PhD and associate chemists, as opposed to some earlier reorganizations there which mostly seemed to let lab heads go. The timing is also uncertain, but September/October seems to be the average of what I’m hearing. I assume that biology and other areas will feel the tremors, too, but I have no information about them. There's nothing on the news wires about any of this, so it's not at the official announcement stage, but people seem to be getting braced.

I’m not happy to hear about this kind of thing, but I can’t say that it’s a surprise, either. Pfizer is going to be having a rough time of it for years to come, what with the Lipitor patent expiration coming closer. And as fate would have it, the company will get to feel that one about as hard as possible, because the various things that were going to cushion the blow haven’t worked out so well.

Think about it – Celebrex was the whole driving force for the Pharmacia/Upjohn acquisition, and just look at it now. Compared to what it was supposed to be by 2008, it’s in terrible shape. Then you have the gigantic failure of torcetrapib, the CETP inhibitor that was going to extend the Lipitor franchise and make it even bigger. That was in late 2006, and the echos have not died away even now. And then there’s the ruinous failure of Exubera, the inhaled insulin that was going to be a runaway best seller all its own. (Oh, it really was, although it’s hard to remember that - a reader sent me a 2006 analyst report (Hambrecht) which is just giddy with expectations – Pfizer’s 1.2 billion sales projection is clearly way too low, you see, and the brokerage’s own 2.5 billion might be conservative. Heck, 5 billion in sales is “very achievable” by 2010, so you’d better load up now, because the ship is sailing, the train’s leaving the station, and so on. . .ah, Wall Street.)

So, Pfizer’s buffers are exhausted, but the big beaker of fuming nitric acid is still going to unload on schedule. It’s going to be a tough place to work, and it’s going to be a tough stock to own. If you have a chance to do anything about either of those situations, I’d look into it.

Comments (41) + TrackBacks (0) | Category: Current Events


COMMENTS

1. Anonymous Big Pharma Researcher on July 2, 2008 8:07 AM writes...

When my employer was having problems that got EXTENSIVE coverage in the NY Times and Wall Street Journal a while back, complete with Federal charges against some execs and the sacking of our CEO, a colleague went off to Groton. Well, this colleague's first day of work at Pfizer was the day their stock sank on the news that torcetrapib was dead!

Before s/he left, s/he and I had several "stay versus go" discussions, and although I felt bad for him I also felt a peculiar sense of relief at this, because I had been wondering whether I made a big mistake not following this person to Groton. Nobody knows what the future of my company may hold, but at least I wasn't being a total idiot to stay in this case...

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2. SK on July 2, 2008 9:48 AM writes...

I really don't understand Pfizer. They laid off how many people 2 years ago? Then last fall, they hired 5 PhD chemists that I personally know -- all went to the Groton site. And now they are laying off again?

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3. Wavefunction on July 2, 2008 10:36 AM writes...

Why did Exubera fail? Isn't an inhaled insulin device a holy grail?

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4. France on July 2, 2008 10:50 AM writes...

That's right, no sociopaths in suits at Pfizer. A drug company that doesn't want to make drugs? More short term, greedy bozo thinking from out freshly minted MBAs.

These yougins want to download drugs from the internet!

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5. Petros on July 2, 2008 11:01 AM writes...

Pfizer is probably already suffering from the impact of generics on sales of Norvasc, Zyrtec and Neurontin, all of which lost patent protection in the period August 2007 to January 2008.

While the combined impact of these will be less than the Lipitor effect in 2010/2011, it won;t help Pfizer too much and the impact of such of Sutent and Lyrica isn't enough to assuage the financial people

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6. Rev. Howard Furst on July 2, 2008 11:11 AM writes...

Wavefunction, Exubera didn't reduce the need for finger-stick measurements of blood glucose, which hurt more than the fine-bore insulin needles used these days, and doesn't substitute for long-acting insulin injections for overnight control. Furthermore, Exubera caused some modest lung dysfunction and the inhalers look like the "bongs" that kids use to self-administer smoke from recreational psychoactive herbs. Just the thing to draw attention if used in a restaurant for a pre-prandial insulin boost. A perfect storm of little factors leading to utter failure.

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7. zahra on July 2, 2008 11:13 AM writes...

thanks i,m pleased to read your nice blog 4the 1st time
i need 4your help in my decision.im egyptian student in faculty of medicine mansoura &have ended waiting for taking post in hospital &ask you for your opinion what best to take pediatric or to take diagnostic radiology
many thanks

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8. eugene on July 2, 2008 11:18 AM writes...

Wasn't the Groton site responsible for Chantix though? I remember a PhD (from MIT) giving a seminar at our university and talking about the people behind it and showing pictures of Groton in the process. Hope he won't be out of a job.

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9. vasili on July 2, 2008 11:29 AM writes...

Exubera was the first attempt to develop inhaled insulin.

After the termination of the project Lilly and Novo Nordisk decided to kill theirs because of the results from the system from Pfizer.

http://www.msnbc.msn.com/id/23527042/

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10. Rich Apodaca on July 2, 2008 12:17 PM writes...

Wavefunction (#3), this article has some details on why Exubera was pulled:

http://www.nature.com/nbt/journal/v25/n12/full/nbt1207-1331.html

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11. Hap on July 2, 2008 2:36 PM writes...

On one hand, if you know that you're going to have less money, you cut expenses so that you can get by - what's happening to a lot of people lately. On the other hand, where are the drugs going to come from if you get rid of the people who find them for you - unless you do some sort of directed move to cut costs and change how you find more drugs, cost-cutting in this way seems counterproductive for the medium- to long-term future. Alternatively, they may be assuming a shift of drug research to small companies, in which case Pfizer, et al., may figure they can buy any candidates they need. In the long term, that seems to provide a massive disincentive for people to become chemists or biologists, but that isn't strictly their problem.

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12. RTW on July 2, 2008 4:02 PM writes...

This whole Pfizer problem started when a third rate Pharma company decided that they wanted to play in the big leagues by gobbling up two other mid sized pharma companies, Warner/Lambert then Pharmacia/Upjohn. I think this mostly due to greed in order to get their hands fully onto Lipitor (Developed by WL/Parke-Davis ) and Celebrex (Pharmacia). WL and Pharmacia didn't have the good sense to attempt to market these drugs alone and sought out a marketing firm (Pfizer).

All that Pfizer has ever been good at is marketing drugs, usually other peoples. They have no idea how to manage R&D. BTW Sutent and Lyrica come from Sugen (Pharmacia) and the former Parke Davis labs and were in the pipeline prior to the respective acquisitions.

The Groton R&D facility is much bigger and better funded than the rest within the company, but nearly nothing of significance comes out of the Groton labs. If I where you I would keep an eye on what is going on in Sandwich UK labs. They are now in a position to be the best Pfizer has to offer. The most productive of their sites by every measure they closed last year in Ann Arbor (The former PD site).

Anyone that does a deal with Pfizer in my opinion is doomed. Co-marketers, as well as small biotechs have not fared very well once Pfizer has gotten involved with them then cut them loose. Esperion may be the exception but it only put a lot of money in the pockets of the major owners. Its being reincarnated you might say now.

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13. arthritis-treatments on July 2, 2008 9:10 PM writes...

just when you thought that Pfizer is a really really big pharmaceutical company.

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14. CMC guy on July 2, 2008 11:28 PM writes...

As with discussions about GSK a few weeks back Pfizer seems moving more towards a "Marketing" based organization who will have to in-license most new products. I think they have Mergered themselves to death with a lost appreciate of value (and timeframe) of the science and perpetuated blockbuster mindset. When R&D becomes a big draining cost center hole rather than road to the future it makes "sense" to lope off. Problem is lack of innovation in R&D often is rooted from those same people not leading effectively.

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15. Phil-Z on July 3, 2008 8:08 AM writes...

Groton was the site of a huge multi-year five sided management battle back in the early 90's that "Tuna" eventually won. It's never recovered. IMO, he purged anyone who had opposed him, or had looked at him funny, and the result was hollowing out R&D there. Right now Pfizer R&D is a shell, like the Soviet Union in the 1970's. Why Barry permitted it was never clear to me.

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16. burt on July 3, 2008 8:52 AM writes...

Does anybody know roughly how many Discovery chemists PFE still employs? Are they smaller than Abbott yet?

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17. MTK on July 3, 2008 9:32 AM writes...

Let me ask a few questions here

a. If, as some have contended, Pfizer cannot manage an R&D organization, then why would you want them to continue to do so? That doesn't make sense. If I stink at baking cakes, but am pretty good at making bagels, guess what? I'm going to stop baking cakes.

b. If nearly all of their successful drugs have come from the outside, rather than Groton, wouldn't it make sense for them to concentrate their resources in the most productive paths and cut back at Groton?

c. If Pfizer management doesn't appreciate or know how to manage scientists, then, besides the turmoil some will personally suffer from job loss, why would we bemoan these layoffs? Aren't we, as a discipline, better off getting jobs at other places where we are appreciated and respected?

I guess what I'm saying is you can't have it both ways. You can't say that Big Pharma, management, the suits, the sociopaths, whatever you want to call "them" stink at managing research, then complain when they decide to get out of the business of managing research. If their track record and history is as bad as everyone believes then it's in all of our best interests that we split up and move on. Right?

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18. CMC guy on July 3, 2008 10:21 AM writes...

MTK I think one could have it both ways if you reverse the view. Replace the management with people who do appreciate and can lead science to accomplish realistic goals. On the other hand having only science people who do not comprehend business is problematic (see majority of Biotechs). IMO there needs to be a good balance of diverse skills in a range of disciplines from R&D through to Marketing/Business and strong leaders that can blend together. I do really not expect this to happen (at Pfizer as well as other companies big and small) but can dream it can be done.

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19. Don B. on July 3, 2008 10:26 AM writes...

Remember they have a "hamburger lawyer" at the top now & recently hired a 'slice & dicer' ex AT&T.

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20. PharmaProfit on July 3, 2008 10:46 AM writes...

MTK (#17),
Many of the contentions (Pfe cannot manage R&D, Pfe drugs come from other than Groton (the G is silent, by the way)) are correct. And apparent to many outside of the organization. Among Pfe's myriad problems is an extreme amount of arrogance (both management's and quite a few of the legacy scientists), coupled with an inability to see the truth. When the lies are believed, you have a recipe for disaster.

Sadly, you are correct in that the best recourse for many of the scientists would be to shut down R&D and have the company get back to what it can do....marketing. Though one wonders if they can even do that well in a post-blockbuster world.

In any event, a clear vision and direction, and the leadership to get there, is sorely lacking.

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21. Nick on July 3, 2008 11:45 AM writes...

MTK-

"Aren't we, as a discipline, better off getting jobs at other places where we are appreciated and respected?"

Please post the names of these companies that are hiring.

-You can't, because they don't exist. For every 1 hire there are 3 fired.

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22. MTK on July 3, 2008 12:08 PM writes...

Nick,

According to the last C&E News survey of members, the unemployment rate for chemists in 2007 was 2.4%. That's less than half the national number. Salaries are keeping pace with inflation rising on average 3.5%.

http://pipeline.corante.com/archives/2008/07/02/more_pfizer_layoffs.php#355415

That does not support your contention that 1 are hired for every 3 fired. If that were true, we'd have higher unemployment rates and falling salaries, neither of which seem to be happening.

Maybe 2008 will be different, but I doubt markedly so.

CMC, I agree wholeheartedly. My point was just that if you feel you can't manage research, then why is it so bad when management comes to that same realization and does something about it.

To carry the relationship analogy further, if it is that bad, it's better for all to breakup. I guess no matter how bad it is, though, you'd rather be the dumper than the dumped.

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23. MTK on July 3, 2008 12:10 PM writes...

Sorry, wrong link.

http://pubs.acs.org/cen/acsnews/86/8609acsnews1.html

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24. Hap on July 3, 2008 12:27 PM writes...

MTK-

Either the ACS numbers are off or there are a whole lot more anecdotes of people being unable to find work than actual people unable to do so. Considering the constant outcry of "not enough chemists" and its lack of application to reality (see Science article of late May on the revision of Gathering Storm degree numbers for a potential example), both may be operating.

The other problem is that the jobs lost at Pfizer/GSK, etc. probably are going to be outsourced - either to smaller pharma, where increased work hours and lower benefits are likely to decrease pay (or make it impossible for older chemists to work in the field - the C+EN News article noted a correlation of pay to company size), insourced, by getting visa applicants willing to work for what they would like to pay, or physically outsourced to other countries. None of these options bode well for chemists, at least ones currently working. Some will find jobs, and some will build their own, but lots will be wondering what all their time in school was for, exactly.

There is also the level of jealousy for businesspeople/MBAs. At the moment, though, the pay and security (in added pay if fired) of managing a company seems grossly disproportionate to the risk involved in doing so. The scientists seem to be paying the price for poor management, while the people whose management skills led to the failures reap rewards for their incompetence. I'm not particularly eager to see the guilty rewarded and the less guilty burned at the stake, and that is what appears to be happening.

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25. processchemist on July 3, 2008 1:09 PM writes...

>The other problem is that the jobs lost at
>Pfizer/GSK, etc. probably are going to be
>outsourced

It's already happening. Wuxi is growing, other smaller companies like Bioduro see a bright future. And the Big Ones are still out for shopping, looking for licenses and promising (?) projects and companies.
In my line of work the situation is somewhat spotted, in Old EU, where between the outsourcing firms, big and small, some are living a black crisis and others see an upward trend.
But the "we will shift to Asia" threat has been used widely to keep prices as low as possible (or impossibly low).
Most of the money is going east, heavy restructings are going on, site shutdowns have been awful etc. Talking about the benefits of the globalized economy to a freshly unemployed chemist it's not so polite.
On the scientific side also there's a drawback: you move productions to places where safety and environmental laws have no relevance, so you have unsafe and dirty processes. About a 20% of our chinese suppliers have stopped the plants because of the Beijing Olympics Games... what do you think about it?

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26. Anonymous on July 3, 2008 1:22 PM writes...

Hap,

Those are all very reasonable statements. I don't necessarily agree with all of them, but they are not without validity.

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27. burt on July 3, 2008 1:28 PM writes...

"About a 20% of our chinese suppliers have stopped the plants because of the Beijing Olympics Games... what do you think about it?"

Not to mention the quality problems and the "wandering" IP risk. And the difficulty of managing people across 12 time zones. You get what you pay for! Except when you are talking about MBA's that is...

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28. CMC guy on July 3, 2008 2:19 PM writes...

MTK even though correct I would rather see most management dumped rather than R&D cut it is as hap suggests for the disproportionate rewards plus lack of true leadership. Most pharma used to be better balanced and generated good science and business results. I think it is possible to manage R&D people and programs well, although not necessarily through standard or packaged business models. When it come to drugs many contributions are required from different areas for success, so I don't exclude MBA types but seems when they are in total control the focus in on short term profits and not fundamental strength via innovation.

My gut is that ACS info is not reflective of reality. Many chemists are underemployed or moved on. Future prospects worse. Agree outsourcing will continue to expand and mostly in cheap labor zones.

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29. RTW on July 3, 2008 2:46 PM writes...

MTK,

As for point a) Sure you can make bagels, but did you fire all your bakers?

b)That's fine if all you do is acquire the rights to a drug, and leave the R&D organization it came from alone and healthy. After all that organization must have done something right huh? As for cutting back at Groton - Never happened before liekly not to happen this time either. Other more productive better run facilities are cut and closed. Groton is an untouchable museum exhibit....

c)Why should we bemoan these cuts..? Well it effects a lot more than just the scientists involved. It can effect whole communities like it has in Ann Arbor, Kalamazoo, Skokie etc... It will have the added effect to demoralize the scientists that managed to be lucky and get a transfer slot to other Pfizer facilities, only to loose it should Pfizer suddenly see the light and start reducing more to market bagels. Productivity goes in the toilet when these things start to loom large.

Later you go on to say that the statistics in C&E News doesn't support incidental information some are posting here. True - but in my 30 years as an ACS member I have never nor will I ever fill out that survey... There are also a huge number of practicing chemists that are not members. At best that survey is very misleading as most such are. I think just about everyone I know that was displaced from Ann Arbor that found work elsewhere including moving to Groton would say they have taken a step or two backward, in terms of salary and benefits or if not that then their career with Pfizer. There are still plenty I know that are still unemployed or under employed if they haven't left chemisty altogether.

However of those no longer with Pfizer I will say one thing. Universally they all claim and appear to be much happier people.

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30. MTK on July 3, 2008 3:53 PM writes...

RTW,

a) Of course I let go of the bakers. Why would I hold on to them if I decide not to make second rate cakes?

b) I agree that they should have kept those organizations that were doing well, but they didn't. They, seemingly, cut those and kept a weaker sacred cow in place. That was a mistake, but you don't compound that mistake by continuing to keep the sacred cow if you can't get it to produce milk.

c) I did make an exception for the real personal trauma people go through. My statement was, "as a discipline". My opinion: Times change. At one point the company town with the company store was very common. Not so long ago, retirements were built on traditional pension plans. Hell, I remember when I made calls on a landline. What makes us as chemists so special that we should expect to have continual employment, at our discretion, at MegaCompany X for 40 years? It's an expectation that has long since gone away in most industries. It's a dinosaur. For us to hang on to that fairy tale is absurd. Just as an FYI, I did a search on the keyword "chemist" on monster.com and came up with over 700 hits. Now a lot of those were temps, but still that's a lot of jobs on just that one site. A lot were with companies you never heard of, but that's the point isn't it. Times change.

As for the ACS survey, I believe it said the response rate was around 25% which I would say is fairly representative. Believe what you want. Everyone does.

The last sentance you wrote is probably the important one. Most people you know are happier anyway. That's why I said if Pfizer was so crappy at managing science and treated scientists with such contempt, why should we complain when they want to get out of managing science?

Hap, the anon #26 comment was me.

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31. Albert on July 3, 2008 7:03 PM writes...

MTK-

" Just as an FYI, I did a search on the keyword "chemist" on monster.com and came up with over 700 hits. Now a lot of those were temps, but still that's a lot of jobs on just that one site."

Most of those jobs are for recruiters. Multiple postings for the same job. My guess is the ratio is one real job for every four recruiter postings.

I'm not sure why, as a scientist you instantly accept the validity of the ACS numbers. They support their own high salaries by taking in large contributions from business (Even Ronald Hoffman at Cornell has scolded them that they are overpaid and have veered from their mission. Sound familiar?)

ACS numbers are based on those who

1. Are members
2. Fill out the form

Of course you also need to assume the ACS is processing the forms properly (hanging chad anyone?) and that they even represent "Joe or Josephine Chemist". I've seen nothing to indicate the ACS is a representative organization.

Maybe if you visited a community devastated by a plant closing you'd understand the downside.

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32. CMC guy on July 3, 2008 11:33 PM writes...

In terms of a interesting management/leadership approach this interview with J&J CEO may be worth a read;

http://knowledge.wharton.upenn.edu/article.cfm;jsessionid=a8301f090ade4c2a1a6d?articleid=2003#

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33. lostchemist on July 4, 2008 12:01 AM writes...

Here are the choices-

1. Stay where you are and roll the dice

2. Look for another job and find a nice place to land.

I watched it happen 3 times from 2000 to 2006 at JNJ. Management laid off teams, opened up half as many jobs and made everyone interview for the positions. These were good people put in a humiliating position. After they closed to Ortho site I just couldn't stomach it anymore so I picked choice #2 and I don't regret it one bit. I left big pharma for a bare bones start up and I love it.

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34. Jose on July 4, 2008 1:35 AM writes...

I think an important caveat to the ACS data is the fact that many of the jobs that people find after a big time layoff are significant reductions, in terms of level, salary, benefits, etc etc. Former coworkers who once had 3-4 direct reports are now back to cranking out compounds. Obviously, this is not tragic, but unfortunate. The other question that comes to mind is, WHO exactly chooses to send in responses? The highly successful boasters, or those that are busy beating the pavement for a job? The salary ranges always seem upshifted, but maybe I am just in the later category...

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35. anon on July 4, 2008 8:55 AM writes...

I used to be a member of ACS, but did not renew my membership. Aside from discounts on conference rates (which I rarely attend) and the weekly issue of C&E News, what do they really do for the average chemist? True, job postings are provided, but they are also available on individual company websites and through recruiters. Even if I were still a member, I would not bother filling out their survey cards.

I am sorry to hear that Pfizer is going through more potential layoff rounds, but I am not suprised. It does feel that GSK is becoming more of a development/marketing engine following the Pfizer lead, so I expect that there will be even more research layoff annoucements in the future. Maybe the number of people laid off won't be as large, but still unpleasant to anticipate. Witty is targeting a much fuller pipeline within 5 years to please the investors, and it is too little time for research to impact this goal with currently ongoing projects. (i.e. the compound would already have to be in development to be marketed within this time frame) True, cutting research to fund development or acquisition of outside assets is rather short sighted, but they seem to be assuming that there will always be more biotechs to purchase.

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36. fat old man on July 4, 2008 10:07 AM writes...

I think we all need a view of the big picture. The pharmaceutical industry is undergoing the kind of contraction (at least in US) that was previously seen in steel and cars. The reasons are simple. When generics 1st appeared in the 80's pharma had H1 inhibitors and then happy pills to keep the money rolling in. (I have just found out happy pills actually work great). Now, generic incursion is rapid, big blockbuster grugs are harder to find (for whatever reasons), and the agency is approving fewer new applications (for whatever reasons). R&D will continue to contract as sales fall. I think the surviving companies will not be based on which one is smarter, since any large pharma company knows how to develop a project through to NDA submission. I think survival will be serendipitous, and depend on which molecule Discovery made that is actually safe enough and efficacious enough to pass the practically insurmountable barriers it faces to aproval. I have seen no evidence that these things are predictable, despite all the work to the contrary.

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37. Nick K on July 4, 2008 10:14 AM writes...

fat old man: Very perceptive comment. The pharma business will survive, just as steel- and car-making have, but will be far smaller and employ far fewer people in the future. The Good Times are over.

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38. Anonymous on July 4, 2008 1:53 PM writes...

"You can't say that Big Pharma, management, the suits, the sociopaths, whatever you want to call "them" stink at managing research, then complain when they decide to get out of the business of managing research." reckons MTK.

Er, I can, actually. Your logic is akin to saying that anyone who jumps on board a boat and then proceeds to drill holes in it should not be criticised by the other passengers. After all, the passengers can just jump overboard, right?

It's the new wave of suits that have screwed the research operation up, not the workers themselves. I would contend that the current bunch of arrogant sociopathic MBAs who now run the industry will screw up anything that they try and run.

Firing scientists because of the ineptitude of their executives will achieve nothing except destroying an entire industrial skills base.

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39. Hap on July 4, 2008 2:57 PM writes...

MTK (#30): I sort of figured.

I think that I am more expecting of guarantees than I should, and that is no one else's fault. On the other hand, the same risk-reward calculations that apply to other fields and businesses apply to us - when the cost in time/opportunity cost is so high (6-9 years from BS and $200K), it means that lots of people will get stuck if your field goes away/changes too much to get a job in (which seems relatively easy, particularly for PhDs hired at least in part for specific knowledge), and people going into chemistry should expect a corresponding return (or be aware of the fact that the return does not correspond well with opportunity cost).

If it required less education to be a chemist or if chemistry were less dependent on specific, job-acquired skills, then changes in employment would be easier to prepare for and mitigate. (It would also be so if pay were higher, effectively earmarking pay for future support.) Since it is not (and at least part of this is due to hiring for very specific skills), then job cuts without hope of renewal are apt to be painful, and bemoaned.

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40. JobDestruction website on September 1, 2008 10:41 AM writes...

Are Pfizer employees being forced to train their H-1B replacements?

There are rumors that Pfizer employers are being required to train foreign workers on H-1B visas. These foreign workers will replace the Americans who trained them.

Sadly this is not an uncommon practice, and unfortunately it is not illegal, despite the myths that have been propagated by shills and paid lobbyists that Americans have protections against this global labor arbitrage.

Does anyone associated with Pfizer know what is going on there? Are qualified American workers training their foreign replacements? If you have credible information to confirm or deny this please go to my website to find out how to contact me, or leave a comment on this thread.

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41. Russell Vorce on March 14, 2012 7:00 AM writes...

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