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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: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« Rember for Alzheimer's: Methylene Blue's Comeback | Main | Job Seekers: Genentech, GSK, and Elsewhere »

August 1, 2008

GSK Layoffs: Yes, Again

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Posted by Derek

The ax is falling again at GlaxoSmithKline. This time it’s the oncology group.

Last month the cardiovascular people got this same treatment, you’ll recall, and there was some disagreement about how many jobs were being affected. But it looks like the company is moving one by one through its Centers of Excellence in Drug Discovery (CEDDs) and running a most excellent scythe through them. By the time they’re through, the total number of layoffs looks like it will be substantial indeed.

That’s because inside each area so far the cutbacks are pretty sweeping. Total oncology head count is apparently being reduced by about 40%. Discovery chemistry seems, unfortunately, to be getting it a bit worse, since some of the sub-areas aren't losing head count at all. The estimates I have are that of the c. 120 chemists in the area, about 60 are losing their jobs. That includes the entire oncology med-chem group at the Research Triangle Park location, and from what I'm told, none of them are being relocated to the Philadelphia-area sites. So much for discovering Tykerb, et al.

Are all of the CEDDs going to get this same treatment, or to the same degree? GSK isn’t saying, but I’d certainly bet on this sort of thing happening again as the year goes on. What the company’s research arm will look like when it’s all over is anybody’s guess, too, but there’s one thing for sure: it’ll be a heck of a lot smaller.

And whether this new trimmed-down inlicensed/outsourced GSK will be any more productive is anybody’s guess either. But we won’t know that for a long time. It’ll take quite a while just for all of these changes to stop reverberating through the company, for one thing, and then it’ll be several years after that before it’ll be possible to look at the pipeline and have a majority of it be a product of the new organization. As I’ve said before, this is one the biggest challenges in trying to engineer a large-scale change in a drug discovery shop – the lag time before you see the effects.

I’m already seeing resumes, but I’d like to invite any readers who know of openings for experienced drug discovery positions to either mention them in the comments or email me about them for a future post. (I did a lot of that during my own experience with a site closure, but of course, this time I don’t know most of the people involved personally). At the rate things are going, I’m going to have to start running classified ads down the right side of the page.

Comments (53) + TrackBacks (0) | Category: Business and Markets | Cancer


COMMENTS

1. Petros on August 1, 2008 8:42 AM writes...

CNS (Harlow & Verona) got hit before Stevenage, partly due to the new Singapore/Shanghai effort.

Eastern England has taking a pasting in recent years with Merck closing HArlwo, UCB closing CAmbridge and significant cutbacks of both GSK CeDDs

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2. sharanya on August 1, 2008 9:00 AM writes...

Hi Derek.

I am a first year grad student in one of the MSKCC synthetic groups.. After coming to know about the GSK downsizing, I am glad am not graduating this year.. Though it might be worse 5-6 yrs down the line, no one can tell ! I am hoping that a synthetic chem card would prove useful for job-hunting.. !

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3. processchemist on August 1, 2008 9:08 AM writes...

I can't find a word about bodycount in Harlow and Verona...

Here there's an interesting link:

http://www.rsc.org/chemistryworld/News/2008/June/11060802.asp

Most notable of all:
"Despite the cuts, both Ley and Bains say there is still strong demand in the UK for good chemists - although both stress the need to be innovative and creative in their thinking and approach to the job"

What a creative approach means is clearly explained:

"Chemists will have to be creative about finding jobs, both in terms of the industry and geography"

Tragic or hilarious? Choose your own...

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4. The Pharmacoepidemiologist on August 1, 2008 9:08 AM writes...

Derek, the flow of resumes from GSK can not compare with the flood of them from the good folks at Genentech now inundating every biotech on the peninsula. The last week has been just unreal. Hearing the same thing from friends at other companies.

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5. Harlowmedchem on August 1, 2008 9:35 AM writes...

Around 75 chemists will go in Harlow.

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6. Anonymous on August 1, 2008 9:40 AM writes...

In WSJ blog a couple days ago:

http://blogs.wsj.com/health/2008/07/30/hey-drug-resarchers-lotsa-luck/#more-3064

"Just today we talked about R&D with GlaxoSmithKline’s newish CEO Andrew Witty, who was visiting New York. The problem in drug discovery and development isn’t the technology, he said, but a misunderstanding about the enterprise itself. “Drug discovery is not a process,” he emphasized. Finding new drugs takes an eclectic mix of serendipity, scientific judgment, good decision-making and focus."

Repeat of comment made there: Witty is correct that is not a process but drug discovery has been treated that way for many years by execs/managers that know little and care less about what R&D does. Focus on Marketing, Profits and M&As have lead to many failed decisons that side tracked innovation by science groups. Lean is good idea but some cuts (are) to the bone and need an organization with a complete view and wide functional areas or will never be able to translate the bench research into patient treatments.

At the same time I still think GSK are building up Research in China- maybe hoping those groups will be luckier as don't think will have the expertise for a while (and the top-down management of R&D has largely yielded the situation currently being critizied for lack of innovation).

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7. Anon on August 1, 2008 9:47 AM writes...

30-40 jobs will go in Verona (minimal compared to the 165 jobs in Harlow). The Verona site has had a strike about it and their unions are still contesting it.

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8. processchemist on August 1, 2008 10:30 AM writes...

#7

so in Harlow the cuts are 165 or about 70?
Still with an extended search, also in italian, I failed to find a word about the cuts or the strike.

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9. Kay on August 1, 2008 10:34 AM writes...

I was just looking at my C&E News, and I noticed GSK has a big ad in the job section, saying they are looking for "synthetic organic chemists". Kind of startled me, since I was part of the layoffs in PA.

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10. Hap on August 1, 2008 11:46 AM writes...

Kay: I hope this isn't mean (I don't mean it so) but maybe they're doing the "Circuit City" model of drug development - "If we just get rid of all the people making $X/year and replace them with people making $0.5X/year, we'll make more money...." That worked out really well for CC - all the good people know to go somewhere else, and the bad people know as long as they don't suck enough to get fired and aren't good enough to get pay raises to the death line, they have a job. Their stock price pretty much showed how well that reasoning went over.

I'm sure that'll work out well for future drug development at GSK.

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11. Not the smartest guy in the room on August 1, 2008 12:28 PM writes...

From the CEO of GSK, Andrew Witty, latest Q&A:
Q: What is the company’s overall direction with regard to chemists? Will the yearly increase in outsourcing continue? What is the future of small molecule drug discovery within GSK?
A. First, let me be clear on outsourcing. We hear a lot about the benefits of outsourcing – and of course there are many to be gained. However, you have to be strategic about what you outsource. The key question for me is; does outsourcing create value? If it does, we should consider it and when we do we should stop doing that work in-house. You might be surprised by the number of examples I have found where we have outsourced a process or activity but then, because we do not seem to trust the outsourcing company, we continue to monitor the chosen partner in such a heavy way that we may just as well have kept the work in-house!

In terms of chemistry, it is critical that our molecules are world class and that depends on our chemistry skills. It’s clear that chemistry is a key strategic capability. We are looking at ways of ensuring that the quality of our chemistry (and our chemists) remains at the highest level. Good chemists are hard to find and we need to retain and develop them. Small molecule chemistry and chemists are still vital incredibly important to the future of this company’s R&D.

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12. RKN on August 1, 2008 12:52 PM writes...

I'd be highly suspicious of the CEO's so-called key question: "Does outsourcing create value?"

The bottom line in these sweeping layoffs is that the company no longer has to match 401ks, pay health insurance for the employee and his/her family. They no longer have to fund vacation pay, sick leave, or pay for training, seminars, conferences, etc., plus all the travel involved. Or fund pensions and such, assuming the company still does that.

In essence laying off lots of people significantly reduces the costs involved with having to manage people. And if Big Pharma is managed anything like Big Oil is, where I worked, those expenses aren't insignificant. Outsourcing and contracting pushes the liability for these expenses onto someone else. My guess is that's the real motivation behind these layoffs, or at least a big one.


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13. Anon on August 1, 2008 2:29 PM writes...

#8

>165 jobs will go at Harlow, of which 75 are chemists.

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14. Anon on August 1, 2008 2:34 PM writes...

#8 There are going to be 30-40 job cuts at Verona from the Neurosciences (former psychiatry) CEDD. The strike was a half day strike where most people stayed at home. Why is there any reason to doubt this? It is a fact. I don't believe GSK themselves are in the habit of publicisising jobb cut details about individual sites, or indeed strikes!

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15. CMC guy on August 1, 2008 2:46 PM writes...

#11 ntsgitr do you have a cite/link for these comments by Witty? Would appreciate context and likely other comments. thank you

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16. chemistdude on August 1, 2008 3:55 PM writes...

#11 were in a Q&A session posted by Andrew Witty on his area of the GSK intranet. A chemist (From UP?) has sent this question via the link.

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17. anon on August 1, 2008 3:58 PM writes...

#15: This was published on an internal website, and both parts of the statement are reproduced exactly as we saw it.

Derek: Thanks for encouraging potential employers to publicize their job openings through your site! The (very few) internal openings closed up quickly after the CVU purge, so the rest of us are out in the cold if layoffs happened within our CEDD. Our CEDD was told that we would have more information about the budgets towards the end of the year (november), and I expect that other CEDDS may be in similar situations.

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18. CMC guy on August 1, 2008 4:58 PM writes...

#16/17 thanks for clarification and peek into GSK. As outsider I am not sure what to make of Witty yet- many things he says make sense however company actions of late seem at times to run counter to statements (and truism actions speak louder than words). Sure feel for those insider (or formerly so) as likely a tense situation. Unfortunately as Dereck points out it takes a long time to see results.

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19. Anonymous on August 1, 2008 5:16 PM writes...

Genentech still has several senior med chemist positions open. Obviously there is some uncertainty with the Roche deal, but the claim is that research will be untouched and we aren't waiting until any deal closes to fill these positions.

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20. CC on August 1, 2008 5:46 PM writes...

Derek, the flow of resumes from GSK can not compare with the flood of them from the good folks at Genentech now inundating every biotech on the peninsula.

This just makes no sense to me. If you're so attached to today's Genentech, it seems like the closest thing out there is going to be Roche's Genentech. Why would you rush out to join some random biotech, if that wasn't an attractive option last month?

Sympathy and luck to all the affected GSK people...

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21. chemist on August 1, 2008 10:07 PM writes...

Having worked in medicinal chemistry, at several companies over the last 15 years, it's obvious to me why they are canning so many people. The clowns who work in these places are ridiculous, they have no mind for productivity, how to increase throughput in discovery, how to use of automation and modern instrumentation etc. (without forking over 150K to agilent per instrument and never even putting the damn thing to use) It's laughable. I welcome the cull that's going on, get rid of all these old school idiots, they're worthless. Things will not move forward again until we stop working like some archaic graduate lab.

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22. Hap on August 2, 2008 12:45 AM writes...

Problem is, the "old-school idiots" were the only ones to actually come up with working drugs - if the new people were able to enhance productivity so much, you'd figure that someone (either at the big companies or at smaller ones) would actually be making and selling new drugs, and there wouldn't be any need for the purges, because there would be plenty of money to go around. Alas, that doesn't seem to be the case.

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23. processchemist on August 2, 2008 2:05 AM writes...

@#14
I have no doubts about the strike: I only register the complete blackout about it on the national and local press.

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24. Oracle on August 2, 2008 11:00 AM writes...

I think people are forgetting GSK (like everyone) is expanding operations in China. So long as you outsource your R&D base, this will continue. Management is in the maximum profit biz, not the drug biz. If they could convert the labs into shoe factories at higher profit margins they'd do it. An organic chemist in the USA is akin to a sail seamstress in the late 1800's. You might have advised 'Apple Annie' diligently knitting her sail to knit faster or use high-tech needles to improve her productivity. The reality is her livelihood is doomed. Hopefully (and this is a slim hope), we'll see a fresh bout of unionization in the industry in the future. This will allow the handful of jobs remaining to have some clout.

Another possibility is a week-long strike nation wide to protest. Since most scientists have timid personalities I don't think this likely.

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25. Jason on August 2, 2008 4:39 PM writes...

This reminds me of a conversation I had with a VC - he said oncology had been overinvested in (at least among VCs) I wonder if GSK had the same idea at decided anything they discovered would face stiff competition from VC-backed biotechs?

BTW, it seems like CV is an area with not too much potential (at least commercial potential) - so why keep scientists busy there?

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26. scooter on August 2, 2008 5:12 PM writes...

I agree with oracle. I went through this in the computer industry. I don't think the real problem is so much that outsourcing is such a winner- it's management's lack of will to invest in anything. Management is not graded on improving the company long term- they want to have a few good quarters and parachute out. They go with whatever is cheaper. Its happening in a lot of industries besides this one.

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27. anon on August 3, 2008 8:52 AM writes...

#24: Yes, I do feel that American organic chemists are not helped by the quite extensive outsourcing to China. It seems that the Chinese plan is to monopolize the industry by charging a cheaper price for services, but they will eventually decide that they want more $ as well. I can see this starting to happen already, take for instance Wuxi. Of course, the Chinese people would have gotten foreign industry to build all of the necessary infrastructure in their country by this time as well. Maybe with our falling dollar, this will play out that in 5-10 years it will be cheaper to make stuff in the US again. If not, the companies will probably look into another coutry with a large availability of intellegent cheap labor. Bottom line: it is all a gamble from our standpoint and it is hard to work with an axe constantly hanging over your head ready to strike. No, I'm not all "doom and gloom," just realistic.

Going back to the other definition of strike: I don't think that it is such a good idea to pursue this line of reasoning. If Americans cause problems for the company by organizing strikes (bad publicity!), then it will just make it easier for them to decide to move jobs elsewhere. In other words, forming unions and striking would most likely lead to even more job loss instead of protecting us. Remember, big pharma hires good lawyers (better than any of us could afford on our own).

My advice to the American chem students reading this: learn from the situation that your "elders" are in and carefully consider if you want to live like this.

Management cares primarily about pleasing their stockholders, and the pharma industry as a whole is under alot of pressure from the government and other organizations to keep prices down. Therefore, management is going to try to find the cheapest cost of goods possible to ensure that there is a sufficient profit margin to please the stockholders (and make sure that the managers each have a new Porsche). Labor/"people costs" is a huge expense for any company, so it is easy to target.

Yes, I realize that it was also bad in the 1990's, but the situation now seems like it is less resiliant than it was back then. Companies built infrastructure in foreign countries that was not present back then, and want a return for their investment. Remember also that some areas of research are very controversial here, but can be run routinely in China. A prime example is the stem cell research programs.

Good luck to my current and past colleagues. It is a brave new world, and I certainly was naive about this happening when I went to grad school.

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28. Anonymous on August 3, 2008 11:32 AM writes...

#21 Chemist - You sound just like my former director...Thought all of us with 15+ years actual experience where fossils because we didn't automatically embrace expensive non proven technologies, and actually used our brains... This same director that had no real med-chem experience... Proposed working on screening hits that anyone with any experience could see were probably binding multiple degradation products rather than the target compound.. That's how unstable they where...

This was really a ploy to remove expensive resources.... Same director targeted almost everyone over 35 without a PhD degree with you are obsolete.. Lets face it - its easier to and cheaper to hire fresh faces that won't argue with you.

#22 Hap - You are right on.. In fact I knew quite a few old school med chemists one of which was involved in research that got not one but 2 drugs out into the market place. I will also add that he had only a BS degree and 30+ years experience and won the Chairman's Award for excellence. It was sad to see however what the new younger generation managers did to him in his later years prior to retirement. His experence ended up counting for nothing.


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29. James on August 3, 2008 2:40 PM writes...

As for Anon #27, I wouldn't hold my breath on waiting for China's currency differential to narrow to the point that it is more cost effective to carry out research here in the US. As products from China become more expensive due to the combination of a depreciating dollar and rising Yaun, it makes EVEN MORE sense to carry out research in China due to the savings in insurance, no EPA crap or worker safety etc. Remember we don't make much in the USA anymore.
So long as chemists are treated as global commodities, a career in the US is impractical for the average citizen. Temporary visas (of which it is well know the caps have not been enforced), allow all the other 6 billion inhabitants of the planet earth a crack at an American Job. It's also good for preventing any kind of worker organization. That's probably the real reason why Americans are tossed in the wood chipper.

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30. anon #27 on August 3, 2008 3:49 PM writes...

James: As an American, I agree that chemists being viewed as "global commodities" is generally not beneficial for American jobs. Service based jobs, with some exceptions (IT service that can be outsourced to India), seem to generally be a better choice for an American to pursue in this global economy.

It is also true that the Chinese have a historical reputation for being lax with their safety standards as well as mistreatment of the environment (and, in some cases, their people), but I don't think that this approach can be maintained indefinately.

China certainly spent alot of effort to clean up Beijing in preparation for the Olympics. Reader's Digest has an interesting story on these efforts, and the (American?) author claims that the area of China where he resides now is starting to closely resemble an American city in some respects. China has Burger Kings and Wal-Marts, and some Chinese are purchasing Hummers and large Buicks. The Chinese people have seen what Americans sometimes take for granted and also want an higher standard of living.

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31. Asteroid Fan on August 3, 2008 4:04 PM writes...

OK, NOW I understand why the price of my GLAXO Dex Spansules went up $150 in almost a month.(So it isn't my ADD-addled brain that has noticed some problems WRT homogeneity lately.) And of course, most insurance plans will not cover (or only partially) these meds produced from unicorn horns.

Look, I am not against good 'ol capitalism and making a profit. But the next time I hear about the "failure" of bioresearch in the US or if some whiner wants to know why cancer or AIDS, etc. hasn't been cured, I'll smack them upside their head with the rock they've been living under for the past 20 yrs. And I'll ask them why so many students have chosen that MBA (+ all the 'fixins) over attending college for at least 10 yrs ("There's a hole in my pocket dear Liza...") and scrambling for that "lucrative" $30,000 post-doc slot. But they won't hear a word 'cuz they're watching their fav foot/base/basket-ball player who will make 6 or 7 big bills even if they don't play a minute. So when they're pacing some hospital pediatric floor and the attending doc is just about out of ideas and/or meds, they can call one of those "players" (MBA, NFL, etc). I'm SURE they'll come up with the cure.

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32. processchemist on August 4, 2008 2:41 AM writes...

@#27

>It seems that the Chinese plan is to monopolize
>the industry by charging a cheaper price for
>services, but they will eventually decide that
>they want more $ as well

Ehi, it's what chinese do best: state-assisted dumping. And not only in our field.

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33. DM on August 4, 2008 6:41 PM writes...

Interesting subjects here about GSK and the article. All Pharma's are