About this Author
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: Twitter: Dereklowe

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October 1, 2008

Hard Times: A Manifesto

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Posted by Derek

The more I think about all the research layoffs that have been going on for the last year or two around the industry, the more I think that we really are seeing a change in the way drug discovery is being done.

Most of the jobs have been lost from the large companies. There have, of course, been shutdowns at the smaller ones, but I don’t think that those have been running at any different rate than usual. Startups and other smaller shops are always rearranging as their skills, finances, and luck dictate – that seems to be going on at the usual pace. But what’s different is the wave after wave of job cuts at the Pfizers, GSKs, AstraZenecas, J&Js – the big hitters (and big employers) of the industry. Even the companies that haven’t had major layoffs (Novartis comes to mind) aren’t exactly hiring heavily.

So what’s going on? My take is still that this is a shift – as far as the US end is concerned – from larger research outfits to smaller ones. After all, the drugs are going to have to come from somewhere, and the deal-making for small companies that have something promising has been intense. It just seems that the larger companies don’t think that they can do as much of this discovery work themselves – not, at least, at the prices that make sense.

Now, it’s true that a lot of chemistry has been outsourced to contractors in India and China, and that several firms have opened research divisions of their own overseas. That’s a cost-cutting move, too, certainly – but look at what this says about research here in the US. Everyone knows – including the people in Shanghai and Hyderabad – that the difficult, high-level research is still not being done there. That’ll change, as the human and physical infrastructure improves, but the bulk of the outsourced chemistry is methyl-ethyl-butyl-futile stuff. It’s “Hey, make me a library based on this scaffold structure” or “Hey, make me fifty grams of this intermediate”.

This kind of thing is definitely cheaper to do outside the country. It’s not always as timely as it should be, or as well-done – so it’s not as cheap as it always looks. But overall, on the average, you can bang out compounds for less money by outsourcing. That’s not going to change, either. The countries that furnish the services may change, as time goes on. But until the whole world is a high-wage environment (or, more horribly, until the only countries that aren’t are so benighted that no such work can be done there), ordinary chemistry is going to be done where it can be done for the least money.

So what’s left for us here in the US? The hard stuff. The risky stuff. The science that needs well-paid experienced people hovering over it the whole time. The cheaper, easier research is leaving – a lot of it has left already. We get to take on the stuff that can’t be outsourced.

And that’s why I think that there’s a shift to smaller firms. They’re traditionally the risk-takers in this business, and I think that’s going to be more true than ever. The larger companies, to me, seem to be trying to play it safer than ever. They have huge costs to meet, and don’t seem to think that they can devote as much of their resources to taking chances. We can argue about whether’s that’s wise (after all, you might think that larger companies with more cash might be the ones who could afford more risk). But that’s not how it’s been working – not for quite a while, when you think about it.

Here’s the hard part: the world does not owe any of us a high-paying research job. Neither the world, nor the US government or the US pharma industry owe us jobs of any kind. I wish that that weren’t true, but it most certainly is. Those of us trying to make a living through science and drug discovery are going to have to scramble for it. We’re going to have to prove our worth to those who are in a position to pay for us, and we’re going to have to try to make as many of our own opportunities as we can.

There are some things that can help us out in this period (see below), and there are some others that will do none of us any good at all. I know from some of the comments here that not all of you will agree with this, but as far as I’m concerned, here are some of the no-good-whatsoever moves:

1. Complaining about the Evil Suits Who Are Ruining the Industry. Look, I’ve been unemployed in this business, too. A merger pitched several hundred of us out into the market when our entire site was shut down. But I didn’t think that it was being done because upper management was enjoying it. They were, as far as I can tell, trying to keep the company going while having it make as much money as possible – the same behavior that had been paying my salary, actually. The constant drive to do those things is what’s paid all our salaries. Now, that doesn’t mean that upper management is always right. I didn’t say that they couldn’t be stupid (hey, I’ve sat through some of those presentations, too). I’m just saying that they’re not evil. Ranting about it is a pointless distraction from the business of keeping your job or getting another one. And besides, if they really are making a stupid mistake, that creates opportunities later on (see below).

2. Complaining about All Those Foreigners. I have even less time for this one. As far as outsourcing goes, I don’t see how I can tell chemists in China not to do the same work as American chemists for less money. (We should be making sure that we’re not doing the same work – see below). This is how economies grow, and how the world improves. I’m living in one of the greatest places in the world, and have been making a better living than most of the world’s population: I have no room to tell someone that they can’t try to reach for the same standard of living.

And as for foreign scientists working here, well, I think that one of the reasons I’ve been living in one of the greatest places in the world is that it’s been a haven for all sorts of bright, hard-working people. We’re not going to turn this into an immigration blog – there’s lots of room to argue about our current policies, particularly regarding unskilled laborers. But that’s not what we’re dealing with in the sciences. As far as I can see, we can use all the intelligent, creative, entrepreneurial people we can take, and we need to make sure that our country is the kind of place that people like that aspire to live in.

So if those don’t do any good, what does? Well, look at the situation. This is, as I’ve said before, a terrible time to be an ordinary chemist in this industry. That goes for the ordinary biologists, too. We’ve all got to demonstrate why we’re worth what we want to earn, and doing something that can be done for half the price somewhere else isn’t going to cut it.

So improve your skills. Learn new techniques, especially the ones that are just coming out and haven’t percolated down to the crank-it-out shops in the low-wage countries. Stay on top of the latest stuff, take on tough assignments. Keeping your head down in times like these will move you into the crowd that looks like it can be safely let go.

That’s one thing. Another one is the traditional advice given in all industries: keep in touch with everyone you know around the business. Use networking sites, keep current phone numbers, drop people an e-mail now and then. Getting laid off may well have had nothing to do with what you did – but finding a new job will have everything to do with it. If you don’t have any contacts around the business, large outfits and small, you’re going to have a harder time of it for sure.

And finally, here’s a more macro-scale suggestion. We medicinal chemists need to think more about being the source of startup companies ourselves. That’s harder to do if you’re part of a service group, or if you have that mentality. If your job is to crank out molecules, then you need to find a place that needs someone to do that. But if you’ve got a larger skill set, it may be large enough to get together with some other creative people and try to get some funding for ideas that no one else is doing. People still need medicines, and as long as we can still discover them here, it sure beats waiting for the phone to ring. If the bigger companies are in fact making a mistake by cutting research, what better revenge than to make them wish they hadn’t?

Comments (101) + TrackBacks (0) | Category: Business and Markets


1. S on October 1, 2008 12:47 PM writes...

Touche, Derek. The comments from the previous post were starting to get old and stinky, especially about foreigners. Folks need to understand what this blog is about.

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2. Toluene on October 1, 2008 1:06 PM writes...

I lost my job at a major pharma in June in my third reorganization in 18 months. Outsourcing was the mantra of the day due to substantial cost savings and the ability to flexibly manage chemistry resources. Looks like this will be the model for the forseeable future--we just need to find a way to capitalize on this change.

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3. Todd on October 1, 2008 1:07 PM writes...

Here's the problem in a nutshell: the capital markets that ultimately keep food in our bellies and the roof over our heads operate on a quarter-to-quarter (or year-to-year) basis, while, barring some radical change in regulations, our line of work mandates decade-long timeline, with maybe half-as-long in diagnostics. Simply put, companies are leaving behind research simply for sheer survival. As great and important as research is, the market can stay irrational longer than you can stay solvent.

As a result of all of this, VC and private equity are going to be paying the bills henceforth, which generally implies smaller outfits (companies like Boehringer Ingelheim notwithstanding). Either we adapt or we move on with life. Besides, methinks the laid off plant workers of the world aren't going to have much sympathy for a group of what looks to them as over-educated whiny geeks.

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4. Boffin on October 1, 2008 1:15 PM writes...

Couldn't agree more. However, there should be ethics in how the whole process is conducted, rather than trumped up performance improvement plans to exit the "low achievers" at no cost. And while the world is changing, I do think it is fair to debate whether what is proposed will actually achieve the end goal of more drugs to treat patients. I fear like all the grand solutions of the past, whether HTS, combichem or biologics, outsourcing is just another way of hiding that the emperor has no clothes.

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5. Mark M on October 1, 2008 1:22 PM writes...

"So improve your skills."


And this had better include communication (verbal and written) in English.

I know I have harped on this before, but it really is not OK to put forth a resume or powerpoint presentation with grammatical and/or spelling errors. Find another pair of eyes to review your work before hitting send/save.

Hunting for a new job after being laid off is a major drag. But some things ARE within your control and should get your best effort.

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6. Hap on October 1, 2008 1:26 PM writes...

There isn't much to do - for us all we can do is adapt or leave the field and find something else we can do. For people entering, as long as the health of the field and of its jobs is honestly stated, they can choose to do what they wish.

Sauce for the goose is sauce for the gander - we like the cheap goods we get by outsourcing manfacturing, so I guess we can't mourn much when it comes around to us. I still wonder what exactly we will be making in the long run, though.

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7. satan on October 1, 2008 1:31 PM writes...

Some of you still don't get it-

1. The guys who ran concentration camps or followed stalins orders were not evil, they were just following orders. Look at the results not the motivation.

2. What about doctors, lawyers.. Those shysters think they have it made for life.. Why not us? Are they any better than you?

The reason that third world countries are what they are is that everyone is looking out for themselves. This paradoxically destroys all the institutions necessary for a decent life. If a person believes that everyone else is going to screw him over, he might not contribute to society. That attitude leads you to societies where almost everyone lives in slums and there is no safety or opportunity. Do you really want to go there...

3. Outsourcing is a fact of life, but the true reason behind outsourcing in high tech is not significant cost advantages, as much as management doing it so they show fictional profits for their next bonuses.

Society and trust are easy to destoy but very hard to rebuild.

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8. Edward on October 1, 2008 1:35 PM writes...

"Here’s the hard part: the world does not owe any of us a high-paying research job"

Ahhh, the world is what you make of it. If your approach was taken,

1. We'd have no minimum wage. Because you're only worth what someone is willing to pay.

2. We'd have no social security or medicare. Because why would you want to help unproductive people that happen to construct their own society?

3. We'd have no laws regarding worker protection, because the market will protect us all. Must remain competitive with China after all.

4. We'd open all the borders (As WSJ columnist Jason Riley's new book "Let them in" suggests. The current 'flood the market' strategy used by the government is taking away the civil rights of the remaining workers.

All in all the libertarian ideals you espouse (when you're not writing really good med chem articles, which I do enjoy) are tiresome and will result in all of us living on a plantation fighting it out with the impoverished masses of the world for our next meal.

Free markets result in anarchy and oppression. Try to step back and see they are only a way to optimize profit, not create a society.

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9. Hap on October 1, 2008 1:40 PM writes...

The problem is that the ways to rebuild trust in business are beyond us - the stockholders have little control over the behavior of the businesses they own, people generally have little control over the behavior of their bosses, and anything we can do politically to guarantee our own jobs is probably counterproductive.

I don't like how I feel, don't have enough risk tolerance to start my own business, and think unoptimistically of the future of chemistry jobs, but there is little I can do to change the business structure substantively. The ways in which we can look out for ourselves (resumes, contacts, skills) don't require screwing other people and may lead to productive ideas in the future - if we can maintain trust in ourselves and compatriots, and do something useful, there might be something left when the business models run their courses.

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10. Boffin on October 1, 2008 1:48 PM writes...

Let me put this another way. The business models of the pharmaceutical industry, both big pharma and biotech are broken. So when the big "heave-ho" comes I'm not about to sink my own money into the abyss of drug R&D. There are too many fundamentals that are wrong. Society is not prepared to pay for incremental improvements on old therapies any more. Many diseases are being fragmented to the point that the market is too small to make a profit. Patent life and the chances of success have been eroded by a risk-averse approach to trials and testing. The big diseases that are left are either very, very risky (e.g. Alzheimer's) or localised in the developing world where I still see a big lack of payers on the immediate horizon. The current fixation on cutting costs is fine but it seems to me that the industry needs a huge leap in productivity well beyond what counting the pennies and outsourcing is going to deliver. A big help would be the recognition that patent life needs to be extended to generate a better rate of return for the industry. But while every other feature film has an "evil pharma company" as their villain, we're not going to get much public sympathy. What we need is a nice lethal epidemic in the first world that reminds everyone why it pays to have a pharma industry. A nice bout of flu anyone ? Until then, I think the only sane policy is to walk away from the industry until such time as society wakes up to the fact that it needs to pay for a drug discovery industry. I think I'll be too old by the time that happens.

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11. satan on October 1, 2008 1:48 PM writes...

About a year ago, I had said that big pharma management would destroy the companies they administered rather than restructure them into smaller completely independent units. Though I wrote that in the comments only a year or so ago, I had foreseen this for about 8 years.

The basis off my prediction was that MBAs behave like viruses. While that is the only way they can exist, and is therefore technically not malicious evil, it ends up killing the host. Hopefully by the time this financial crisis had bankrupted the world, we as a society will realize the folly of our ways, and not repeat it in the near future.

What many of you do not realize is that MBAs are merely the external manifestation if a far more dangerous disease- loss if contact with reality. If you allow shysters to run your society they will rape it and drive it in the ground. The majority of us were complacent or even encouraging them because we thought they could make money from nothing. Turns out, it was just a big fraud.

Ignore my typos, I am posting from an iPhone.

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12. processchemist on October 1, 2008 1:51 PM writes...


Most people use the words "free market" meaning "open shop model" (two different things, both born in the USA).

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13. Anon on October 1, 2008 2:24 PM writes...

Please spare my ignorance but I'm confused. I know several people who are interviewing for positions (recruiters have been visiting school) or have just attained positions at these very same companies that continue to have mass lay-offs. Am I wrong to assume that being fresh out of school you can still get a job? Is this just because companies want younger chemists who may be more up to speed on modern techniques? (Synthesis specifically) I still have several years to go but I hope there is a job at the end of the tunnel.

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14. tyrosine on October 1, 2008 2:46 PM writes...

Folks, what's happening to Pharma has already happened to the rest of the USA 20-30 years ago. Big companies are NOT the source of job creation and have not been for many years. Stats show that the Fortune 500 has been shedding jobs for 30 years. But the overall workforce is growing, how? It's the entrepreneurs and startups.

Wake up and enjoy the entrepreneurial spirit. I am.

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15. SteveM on October 1, 2008 3:04 PM writes...

Re: Post #13. The advantage of youth is not knowledge of modern techniques. It is strictly because they are cheaper.

Generally, I see nothing above about why the pipeline is so thin across the board. Even with cutbacks aggregate Pharma R&D budgets are huge. Yet where are the products commensurate with the investments?

I attended a Decision Analysis conference maybe 5 years ago and a guy from (then Squibb) got up and talked about the registration of 1 product that year given a $2B R&D budget. He knew then that that low productivity was unsustainable.

I stepped out of the lab 20 years ago to do other things. I know since then there has been an explosion of technology to reduce the end-to-end cycle time for the synthesis of compounds (e.g., NMR's no longer scanned by an operator.) and the QSAR stuff I know is fabulous and getting better all the time. So why exactly are not more disruptive products coming to market?

That's a big question that R&D has to ask itself regardless of what the MBA's do to wreck the business.

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16. Dana H. on October 1, 2008 3:11 PM writes...

"The guys who ran concentration camps ... were not evil, they were just following orders."

Uh, I think there were some trials at Nuremberg that concluded otherwise.

"Free markets result in anarchy and oppression."

Yes, free markets gave us the Industrial Revolution, that period of anarchy and oppression which brought an end to the golden age of feudalism. (Aside: do you ever get the sense that some people use certain words without having the slightest clue about what they mean?)

[Sorry for the digression, but both these claims were so preposterous that I just had to respond.]

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17. Anonymous BMS Researcher on October 1, 2008 3:26 PM writes...

To mangle a famous quotation:

First they took away security for the farm workers, but I did nothing because I was not a farm worker.

Then they took away security for the steel workers, but I did nothing because I was not a steel worker.


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18. Wavefunction on October 1, 2008 3:27 PM writes...

This is a great post; empathetic, insightful and wise.

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19. anon on October 1, 2008 3:34 PM writes...

Management is promoting that we outsource more than the current level, and disclosed that the (significantly) more expensive of the two outsourcing contractors is $30k total expense per FTE. A Chinese colleague said that this translates to about a $10k annual salary per FTE. I don't see how we can compete with this. You mention acquiring special skills, but presumably other people are capable of acquiring the same skill sets.

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20. milkshake on October 1, 2008 3:46 PM writes...

Large pharma companies are spending significant amounts of money (tens, even hundreds of millions USD) on non-profit academic institutes with active medchem programs - typically with first-look in-licencing option kind of deal.

Big pharma is looking for a new business model and I expect several major pharma companies will quit their in-house medchem research altogether, and focus on the development and sales. As long as there is huge money to be made in developing new drugs (ie no price controls on new medications) someone will try. Diabetes, cardiovascular, cancer, ophtalmology and neurodegeneration areas are full of unmet needs.

Its is the biology discovery that drives the progress in medchem. So if you are looking for a new job right now I would recommend going to companies that are famous for their biology strengh rather than chemistry. Also biology is what keeps the drug research in US - I am not sure how long this US advantage will last.

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21. satan on October 1, 2008 3:50 PM writes...

My take

I think that is very likely to be one of the end results of this debacle. There are going to be many pissed off people in a couple of years. Massive public loss of confidence leads to revenge, either through a populist dictator or through open or covert acts. At least that is what I have seen throughout history.

""16. Dana H. on October 1, 2008 3:11 PM writes...

"The guys who ran concentration camps ... were not evil, they were just following orders."

Uh, I think there were some trials at Nuremberg that concluded otherwise.""

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22. Merger on October 1, 2008 4:07 PM writes...

FYI Eli Lilly Is the mystery suitor for ImClone if you haven't already heard

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23. Derek on October 1, 2008 4:23 PM writes...

Echo the comment by Milkshake - Don't forget that there is a significant trend to academic screening and discovery centers, fueled by NIH and the RoadMap initiative but also by the universities themselves who don't want to be left out of the game. As is usual maybe the experience wasn't there to start off with but guess what - they are hiring from industry to pull in that experience without the usual learning lag (which is now another route for those people to look into as perhaps a bit more stable environment (for a while anyway))

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24. Hap on October 1, 2008 4:40 PM writes...

I don't think the management running pharma is evil in a human sense, but I think they're evil in the computer jargon sense - their goals are different from those of their companies and those of their (long-term) stockholders. If you receive stock grants reqardless of performance, increasing pay based on company size, and aren't going to be around in a year or so, what exactly should your incentives be? The fact that the behavior required to maximize profit based on these incentives does not appear to be beneficial to employees, companies, or shareholders is irrelevant to those deciding (though one might ask why the incentives persist). Recent market behavior might be analogous - the incentives of the people packaging mortgages and the people rating them were substantially different than those of the market. Their ability to make money based on those investments (and also to go broke based on those investments) doesn't imply that the behavior is not destructive of the market in the medium term. It is yet to see whether the current shifts in business model are productive for the industry as a whole or unproductive.

Financially, shifts of research to smaller companies makes sense because of the productivity and lower benefits and costs. How individual chemists will improve themselves in the environment would seem to be an open question because of the above factors. Eventually, everything will probably compensate - if labor becomes too cheap, people will switch fields and fewer people will enter the field and costs will rise. It may be too late for lots of people, though.

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25. satan on October 1, 2008 4:45 PM writes...

You mean- like a virus that has a goal other than helping the cells that it infects.

"24. Hap on October 1, 2008 4:40 PM writes...

I don't think the management running pharma is evil in a human sense, but I think they're evil in the computer jargon sense - their goals are different from those of their companies and those of their (long-term) stockholders."

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26. Great Molecular Crapshoot on October 1, 2008 5:07 PM writes...

From the inside Big Pharma can look remarkably like a centrally planned communist economy and we all know how that ended up.

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27. carbazole on October 1, 2008 5:14 PM writes...

So, I guess an implicit assumption here is that regardless of where the research is done, the marginal benefit of new therapies discovered is still going to outpace the marginal cost of their development (R&D, clinical, approval). How long will this be the case? Are we already seeing therapeutic areas where its not? It seems like CNS and oncology are a couple fields that should most likely stick around, but those also seem like the two toughest to figure out.

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28. CMC guy on October 1, 2008 5:55 PM writes...

Interesting piece and although is true complaining probably can get over the top the ability to vent, especially on a blog, can be satisfying in ways. I know I have been particular harsh on Management types (MBAs) because I seen so many that do not even attempt to understand R&D and thus as was stated earlier adopt a short term view to maximize profit. I do not view as evil and do know they are just following the herd business mentality that dominates US culture but wouldn't it be nice to hear a suit stand up and claim "we must take a long term view and drug development is a high risk venture" as more than a PR stance. Like everyone else their tendency is to take easy paths rather than go against flow. Scientists do share blame for current lack of productivity however most followed paths set down by Managers who were chasing Blockbusters or Me-too’s.

Good drug development is a multi-disciplinary activity so hard for chemists to stand alone. Whether is in discovery or development the chemistry, thus chemists, can often play more supportive roles to biology or clinical areas so really hard to be independent entrepreneurs. Is very true sentiment that Academics will need significant guidance if they wish to be more fully involved in drug development as most do not know how to spell FDA (not sure some medchems really know either).

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29. JD on October 1, 2008 7:05 PM writes...

Amazing. The first ever global depression will go down in history horribly misunderstood. What a pathetic bunch of ignorant fools we have become. Consumer junkie credit card morons. Say that reminds me.

Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold ALMOST 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, offshore accounts, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST ONE PERCENT HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any 'humanitarian' progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So don’t fall for any of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. IF IT WEREN'T FOR THE OBSCENE, UNREASONABLE, AND UNJUST DISTRIBUTION OF UNITED STATES WEALTH, THERE NEVER WOULD HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE NEVER WOULD HAVE BEEN A COLLAPSE IN THE HOUSING MARKET. Sub-prime did not cause the problem. It only accelerated the outcome. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah Winfrey, Ellen DeGenerous, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. In fact, they specifically endorsed Countrywide by name. The same Countrywide widely responsible for predatory adjustable rate sub-prime lending and the accelerated collapse of the housing market. ENDORSED BY OPRAH WINFREY, ELLEN DEGENEROUS, AND DR PHIL. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. It also drives up the cost for nearly every product and service on the market. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. No offense fellow citizens. But we have been mislead by nearly every public figure. We still are. Even now, they claim to be 'hurting' right along with the rest of us. As if gas prices actually effect the lifestyle of a millionaire. ITS A LIE. IN 2007, THE RICHEST 1% INCREASED THEIR AVERAGE BOTTOM LINE WEALTH AGAIN. On average, they are now worth over $4,000,000 each. Thats an all time high. As a group, they are now worth well over $17,000,000,000,000. THATS WELL OVER SEVENTEEN TRILLION DOLLARS. Another all time high. Which by the way, is much more than the entire middle and lower classes combined. Also more than enough to pay off our national debt, fund the Iraq war for twenty years, repair our infrastructure, and bail out the US housing market. Still think that our biggest problem is China? Think again. Its the 1% club. That means every big name celebrity, athlete, executive, entrepreneur, developer, banker, and lottery winner. Along with many attorneys, doctors, politicians, and bankers. If they are rich, then they are part of the problem. Their incredible wealth was not 'created', 'generated', grown in their back yard, or printed up on their command. It was transfered FROM US TO THEM. Directly and indirectly. Its become near impossible to spend a dollar without making some greedy pig even richer. Don't be fooled by the occasional loss of a millionaire's fortune. Overall, they just keep getting richer. They absolutely will not stop. Still, they have the nerve to pretend as if they care about ordinary people. ITS A LIE. NOTHING BUT CALCULATED PR CRAP. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Sub-prime. Their idea. High energy prices. Their idea. Oil 'futures'. Their idea. Obscene health care charges. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. The multi-million dollar endorsement deal. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea. Vioxx, and Celebrex. Their idea. Excessive medical testing. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, medical testing, love-sick, celebrity junkie. Their idea. All of the above drive up the cost of living, shrink the middle class, concentrate the world’s wealth and resources, create a dominoe effect of socio-economic problems, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. In many cases, the 'charitable' contribution is almost entirely offset. Not to mention the opportunity to plug their name, image, product, and 'good will' all at once. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to 'federal tax revenue'. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for millions because the executives, celebrities, athletes, attorneys, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid. Not to mention the spike in crime because of it. There is a dominoe effect to consider. IT CAN'T WORK THIS WAY. But our leaders refuse to acknowledge this. Instead they come up with one trick after another to milk the system and screw the majority. These decisions are heavily influensed by the 1% club. Every year, billions of federal tax dollars are diverted behind the scenes back to the rich and their respective industries. Loans from China have been necessary to compensate in part, for the red ink and multi-trillion dollar transfer of wealth to the rich. At the same time, the feds have been pushing more financial burden onto the states who push them lower onto the cities. Again, the hardship is felt more by the majority and less by the 1% club. The rich prefer to live in exclusive areas or upper class communities. They get the best of everything. Reliable city services, new schools, freshly paved roads, upscale parks, ect. The middle and lower class communities get little or nothing without a local tax increase. Which, they usually can't afford. So the red ink flows followed by service cuts and lay-offs. All because of the OBSCENE distribution of bottom line wealth in this country. Anyway, when you account for all federal, state, and local taxes, the middle class actually pay about the same rate as the rich. The devil is in the details. So when people forgive the rich for their incredible greed and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, bankers, celebrities, athletes, attorneys, doctors, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Strong middle class, free and clear assets, lower crime rate, more widespread prosperity, stable job market, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, credit crunch, weak US dollar, 13 figure national deficit, and 12 figure annual shortfall. The cost of living is higher than ever before. Most people can't even afford basic health care. ALL BECAUSE OF GREED. I really don't blame the 2nd -5th percentiles in general. No economy could ever function without some reasonable scale of personal wealth and income. But it can't be allowed to run wild like a mad dog. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. UNBRIDLED CAPITALISM ABSOLUTELY CAN NOT WORK. TOP HEAVY ECONOMIES ALWAYS COLLAPSE. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. The American dream will be shattered. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH MAKES WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman.. Of course, they will jump to small minded conclusions about 'jealousy', 'envy', or 'socialism'. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.

So what can we do about it? Well, not much. Unfortunately, we are stuck on a runaway train. The problem has gone unchecked for too many years. The US/global depression is comming thanks to the 1% club. It would take a massive effort by the vast majority to prevent it. Along with a voluntary sacrifice by the rich. THATS NOT GOING TO HAPPEN. But if you believe in miracles, then spend your money as wisely as possible. Especially in middle and lower class communities. Check the Fortune 500 list and limit your support of high profit/low labor industries (Hollywood, pro sports, energy, credit, pharmaceutical, cable, satelite, internet advertising, cell phone, high fashion, jewelry, ect.). Cancel all but one credit card for emergencies only. If you need a cell phone, then do your homework and find the best deal on a local pre-pay. If you want home internet access, then use the least expensive provider, and share accounts whenever possible. If you need to search, then use the less popular search engines. They usually produce the same results anyway. Don't click on any internet ad. If you need the product or service, then look up the phone number or address and contact that business directly. Don't pay to see any blockbuster movie. Instead, wait a few months and rent the DVD from a local store or buy it USED. If you want to see a big name game or event, then watch it in a local bar, club, or at home on network TV. Don't buy any high end official merchendise and don't support the high end sponsors. If its endorsed by a big name celebrity, then don't buy it. If you can afford a new car, then make an exception for GM, Ford, and Dodge. If they don't increase their market share soon, then a lot more people are going to get screwed out of their pensions and/or benefits. Of course, you must know by now to avoid those big trucks and SUVs unless you truly need one for its intended purpose. Don't be ashamed to buy a foreign car if you prefer it. Afterall, those with the most fuel efficient vehicles consume a lot less foreign oil. Which accounts for a pretty big chunk of our trade deficit. Anyway, the global economy is worth supporting to some extent. Its the obscene profit margins, trade deficits, and BS from OPEC that get us into trouble. Otherwise, the global economy would be a good thing for everyone. Just keep in mind that the big 3 are struggling and they do produce a few smaller reliable cars. Don't frequent any high end department store or any business in a newly developed upper class community. By doing so, you make developers richer and draw support away from industrial areas and away from the middle class communities. Instead, support the local retailer and the less popular shopping centers. Especially in lower or middle class communities. If you can afford to buy a home, then do so. But go smaller and less expensive. Don't get yourself in too deep and don't buy into the newly developed condos or gated communities. Instead, find a modest home in a building or neighborhood at least 20 years old. If you live in one of the poorer states, then try to support its economy first and foremost. Be on the lookout for commercial brainwash plots on TV. They are written into nearly every scene of nearly every show. Most cater to network sponsors and parent companies. Especially commercial health care. Big business is fine on occasion depending on the profit margins and profit sharing. Do your homework. If you want to support any legitimate charity, then do so directly. Never support any celebrity foundation. They spend most of their funding on PR campaigns, travel, and high end accomodations for themselves. Instead, go to and look up a top rated charity to support your favorite cause. In general, support the little guy as much as possible and the big guy as little as possible. Do your part to reverse the transfer of wealth away from the rich and back to the middle and lower classes. Unfortunately, there is no perfect answer. Jobs will be lost either way. Innocent children will starve and die either way. But we need to support the largest group of workers with the most reasonable profit margins. We also need to support LEGITIMATE charities (Check that list at This is our only chance to limit the severity and/or duration of the comming US/global depression. In the meantime, don't listen to Bernanke, Paulson, Bartiromo, Orman, Dobbs, Kramer, OReiley, or any other public figure with regard to the economy. They are all plenty smart but I swear to you that they will lie right through their rotten teeth. IT MAKES THEM RICHER. These people work for big business. The 'experts' they cite also work for big business. They are all motivated by their desire to accumulate more wealth. THEY WILL LIE RIGHT THROUGH THEIR ROTTEN TEETH. So don't fall for their tricks. Instead, look at the big picture. The economic problems we face have been mounting for well over 20 years. All of them caused or aggrivated by a constant transfer of wealth from poorer to richer. Soon, it will cause the first ever GLOBAL DEPRESION. Its not brain surgery. Its simple math. Like I said, you are welcome to run this by any professor of economics or socio-economics. If thats not good enough, then look up what Einstein had to say about greed, extreme wealth, and its horrible concequences. I speak the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.

Its already underway. A massive campaign to divert our attention. Trump, Buffet, OReiley, Dobbs, Pickens, Norris, and several other well known filthy rich public figures have been running their mouths about the economy. Finally admitting a hint of severity after almost 2 years of denial. They even have the nerve to acknowledge the possibility of a US/global depression. Still, they refuse to acknowledge the single greatest underlying cause. Remember: Our national debt was way up BEFORE sub-prime. Consumer debt was way up BEFORE sub-prime. The cost of living was up BEFORE sub-prime. Wall Street profits were obscene BEFORE sub-prime. The middle class were loosing free and clear assets BEFORE sub-prime. Our infrastructure was in bad shape BEFORE sub-prime. Loans from China were taken out BEFORE sub-prime. The dollar was loosing value BEFORE sub-prime. So don't let these cowardly filthy rich public figures divert your attention or limit your range of thought. THE CURRENT ECONOMIC CRISIS WAS NOT CAUSED BY A SINGLE POLICY OR PROCEDURE. IT WAS CAUSED PRIMARILY BY A MASSIVE TRANSFER OF WEALTH FROM POOR TO RICH. OTHERWISE, THERE WOULD NOT HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE WOULD NOT HAVE BEEN A GLOBAL CREDIT CRUNCH. MONEY DOES NOT GROW ON TREES AND IT DOES NOT FLOAT AWAY. IT ONLY TRANSFERS FROM ONE PARTY TO ANOTHER. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. GREED KILLS. IT WILL BE OUR DOWNFALL.

A word for those who respond with the usual 'I know more than you. Look how smart, knowledgable, and articulate I am' crap. Let me say this in advance. I don't claim to be an expert in this field. But I did go on record with these predictions long before any public figure uttered the word 'recession'. If you search long enough, you will find my early postings from '05' and '06'. Including the first draft of this rant. Since then, I've gone on record against people like Greenspan, Bernanke, and Paulson. So far, my predictions have been accurate. Like I said. This is not brain surgery. For the mostpart, its simple math. When you concentrate the world's wealth, you also concentrate its capital and shrink the middle class along with the potential market for every major industry. Homes go unsold. Bills go unpaid. Banks fail. More products go unsold. Jobs are lost. More banks fail. and so on. and so on. It happened 80 years ago. It will happen again. This time on a global scale. Throughout the cycle, the rich will tighten their grip. Concentrating the world's wealth and resources even further and ensuring the collapse of every major economy worldwide. Think it can't happen? Think again. GREED KILLS. IT WILL BE OUR DOWNFALL.

Another thing. I don't want credit for any of this. Otherwise, I would have given my full name a long time ago. As far as I'm concerned, you can put this rant in your own words and take credit for all of it. I don't care. Just spread the word. Otherwise, the greatest injustice of all time will go down in history unchecked.

By the way. The bailout won't work. IT WON'T WORK. The plan fails to address the fundamental problem. The middle class don't need more credit. They need a reasonable share of the economic pie. They also need a lower cost of living and a chance to catch their breath. Most of all, they need to wake up and see the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.

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30. srp on October 1, 2008 8:15 PM writes...

The problem with threads of this sort is that they escalate in a spiral of increasing crackpottery. Gross unsupported generalizations about short-term vs. long-term motivations, MBAs, capitalism, etc. do not advance anyone's understanding.

Bluntly, if big pharma's vast expenditures on R&D were returning a bigger flow of profitable drugs these unfortunate cutbacks would not be happening. But people don't want to throw good money after bad. Managers react to these pressures.

The idea that markets don't value long-term value is crap. Just look at the P/E ratios of biotech companies over time--for most of them, everyone was betting on future hits and emphatically did not hold them to quarterly profit targets. Or think about the dot-com bubble, which was misguided but clearly not driven by contemporary earnings.

Every manager would like to brag about his huge staff of brilliant scientists who come up with breakthroughs (and how he astutely nurtures them). Unfortunately, such boasts would ring hollow today because the results haven't been there lately. Perhaps this is solely the fault of idiocy at the top--directors of R&D who somehow screw things up. But perhaps there is a fundamental problem with the methods of discovery and development in routine use by the scientists themselves.

Based on Derek's previous posts, here are some dogmas that could be questioned:

1) Rational drug design is the best way to find good treatments. We should try to target precisely one receptor with one molecule.
2) We need to understand the mechanism of action of a drug in order for it to be successful.
3) Drugs that are safe and effective in humans are likely to also be safe and effective in animal models. (We know that the converse is false, which is why we use rigorous human testing.)
4) The incentives of the FDA and patients are very well aligned.
5) The discovery of new therapeutic regimes using combinations of existing off-patent drugs does not deserve to be rewarded.

While the last two of these dogmas can only be addressed in a public-policy context, the first three could be challenged by any firm or research group.

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31. Shane on October 1, 2008 8:30 PM writes...

Has anyone paused to wonder why this is all happening now, and not at some other time in history? I find explanations that rely on the ethics and ideology of any group of people pretty flimsy. Why wasnt the "evil" of MBAs etc a problem up until now?

My take is that resource contraints have been constantly jacking up the cost of developing a drug. Regulatory hurdles have added to the problem as well. I think research science is particularly vulnerable to a deterioration in the free flow of global trade, which relies on access to cheap limitless energy to make it run. Our supply lines for chemicals, kits and consumables are extremely long. Our work relies on multiple steps, each step requiring chemicals and consumables from all over the world. How will we respond if the supply lines start to sputter out? Offshoring work will provide temporary relief but paint us into a corner if global trade completely collapses. What proportion of drugs used in the USA are even manufactured there anymore?

The number of scientist in the USSR fell by more than half during their central collapse. Is there a plan B for us other than becoming street sweepers?

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32. SteveM on October 1, 2008 9:06 PM writes...

I do believe things are starting to get a little off track...


P.S. Re: Street sweepers. I think the correct employment picture of doom is "waiters serving waiters".

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33. AD on October 1, 2008 9:15 PM writes...

Nice blog Derek.
I am a daily reader and a big fan, but this is the first time I am commenting.
I am an Indian, pursuing a PhD here in USA. However, I have a chemical industry background in my family back in India and have been a constant part of the chemical/pharma industry in India as well as in the USA.
Firstly, let me agree with you in saying that USA is the best place in the world for education, and for pursuing cutting edge science and technology - period. I am having a ball in my PhD, learning a whole lot and loving the science. Coming here for a PhD has been the best decision of my career - and I will always owe a whole lot to the American education system, and thus to America.
However, with all the out-sourcing and especially the downfall of the economy off late - I have been sensing the development of a resentment for the Indians and Chinese people from the Americans, in a huge way.
Which I think is all BS and hypocrisy of the first order. As you said, there is no stopping the outsourcing, and blaming the Indians or Chinese for it is utter nonsense. It is pure business firstly.
And if the people who pursue these kind of fake and nonsensical thought processes think they are suffering and undergoing tremendous hardships in their jobs and lives - PLEASE GO TO THESE DEVELOPING COUNTRIES (INDIA AND CHINA) AND SEE WHAT HARDSHIPS CAN REALLY BE LIKE. Imagine a 8 year old boy or girl selling glasses of water in train stations for the equivalent of 5 pennies each glass, you will find this in every station. Imagine hundreds of thousands of people commuting 6 hours a day for a 10 hour job every day, you will find these in every big city. The kind of standards of living that the average normal American enjoys every day of his life is a life that 70% of Indians and Chinese people dont EVER experience in their lives. Simple things that everybody takes for granted here like - good food, electricity, hot water, basic education - are luxuries in some parts of these countries, and are simply not available in some.
So please, suck it up. There is absolutely NO BASIS for blaming the foreigners for all this.
Again, I love America for the education it is providing to me, and I will try my best to give back. But resenting foreigners for trying to attain a fraction of the standard of living that people have taken for granted in this country is utter BS.
Thanks for the blog Derek, I could never have put it better.

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34. eugene on October 1, 2008 9:24 PM writes...

Wow JF, that's a long post. Er... you have to excuse me if I didn't read it fully, but if it's that long on this blog, I only read it if it's Derek's material and/or doesn't have suspicious use of all caps with poor paragraph break usage.

I was just wondering though, did you write this on a whim right now, or did you write this before and add a few salient details to make it blog appropriate? Also, did you type it somewhere else or all in the little post window that can sometimes kill your entire post after half an hour?

Not saying anything judgmental, I'm just... wow. Respect.

P.S. Finally, more people agree with me on the immigrant issue. It was getting a bit lonely fighting the 'deport all foreign scientists!' crowd with only a few people.

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35. Retread on October 1, 2008 9:50 PM writes...


Attaboy ! ! It takes an immigrant to really see this country for what it is. Thank God we have a lot of them. The guy from Nigeria and the girls from Haiti and Poland in the P-Chem class I'm auditing will get a lot from this country, but they are likely to give back even more (see "Auditing P-Chem" on the Skeptical Chymist).

For the rest:

Has the low lying fruit now been picked? Have there been a lot of blockbuster drugs since I left medicine 11/00 ? In my field (neurology), which I keep up with to some extent, there do not appear to have been. If true generally, perhaps that's why firms are cutting back.

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36. Ribeye on October 1, 2008 10:35 PM writes...

First off, I love the blog, this has always been a great source of information on an industry that is very hard to understand from an outsider's perspective.

Secondly, with Pharma outsourcing med chem, and generally shrinking their efforts in "exploratory" lead optimization, what careers paths are left for young synthetic chemists?

As an undergrad who is in love with synthesis, I have always looked forward to building a career in pharma, where synthesis is used to do very powerful things. But after this year we've had, I'm s