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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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November 11, 2009

Pfizer's Chemistry Head Count - Really?

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Posted by Derek

A reader who's (unfortunately) in a position to know the details sends along some numbers on Pfizer's chemistry shakeout. According to his figures, Pfizer (pre-Wyeth merger) had about 900 chemists. The Wyeth deal brought in about 350, but no one expected the merged department to stay at 1250 - instead, the guess was that the new chemistry staff would be in the 1000 range, which is what I would have guessed, too.

But the chemistry head count is now apparently headed to about 850: smaller than it was before the merger. I have to assume that outsourced chemistry isn't included in this total, and that that's where the deficit is being made up. It is being made up, right? Pfizer isn't actually trying to become a bigger company with a smaller research staff - right? Posters and coffee mugs about working smarter and doing more with less can only take you so far, you know.

As I say, these are numbers from the inside, and I'll be glad to listen to (and post) corrections to them. But from what I'm hearing, this is accurate - and no one (especially at Wyeth) saw this coming on as hard as it has. . .

Comments (51) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. anon on November 11, 2009 8:21 AM writes...

Every time we underestimate the sheer stupidity of Boston Market Man, we find we are in error. More hundreds of people gone who were HELPING humanity and contributing far, far more to the world than he ever could.

Permalink to Comment

2. FME on November 11, 2009 8:54 AM writes...

So,

I do not know anything about the headcount you are referrring to.
I have, however, already mentioned in this fine forum) I strongly believe, that the industry is trying, correct that, is actually altering their business model. That is to say, to outsource "handiwork" outside of the US/Europe and focus on marketing. This argument fits exceedingly well with the current news be it from Pfizer, J&J, MRK and what have you not.
All the best

Permalink to Comment

3. Anonymous on November 11, 2009 9:00 AM writes...

Has anyone checked the Wuxi web site Chinese version, and compared to the English version? There are some very interesting things to be learned. The Chinese version contains much more aggressive language, & presents Wuxi as an enterprise to discover and develop new drugs - not the "partnering" subservient stuff on the English version site. And Wuxi has purportedly learned the trick of repatriating native Chinese speakers into good positions, then slashing their salaries once they have moved back and are committed. Wuxi is rapidly developing a really bad reputation among Chinese chemists in the US.
The rhetoric for the mergers about streamlined R&D, partnering with Asian CROs & CMOs is reflective only of those few CEOs and upper management types who will directly benefit monetarily from saving a few dollars now. The fact that these upper management pharma guys are training our competitors is beside the point - the O/S strategies make money for these few hundreds of individuals across the industry, at the expense of not only pharma jobs for scientists in the West, but also at the expense of human health globally.
I would like to ask these few hundred CEO/upper management folks what their plans are for their respective companies' survival ten years from now. Do they truly expect O/S to save the so much money over the long term? And how fast will new innovations come from vendors under their thumbs? Or will we see more and more Dr Reddy's type chemistry that is "a sack of raving nonsense." How many more melamine and heparin disasters? And how will the CEOs/upper management types distance their names when the next disaster is tied to a Big Pharma due to the suspect Asian vendor? You will have to own that disaster Mr Kindler, Mr Clark, Mr Viehbacher, Mr Brennan, and your entourages of yes-men.
But what's a few tens of thousands of jobs lost, or a few thousand deaths from tainted drugs when you have the chance to make so much money now?

Permalink to Comment

4. You're Pfizered on November 11, 2009 9:25 AM writes...

I think that the notion that we are training the WuXi and ChemPartners of the world and that they are skimming compounds, intermediates and scaffolds is widely understood by folks in the trenches. Once you get past a certain level, however, it's probably looked upon as self-serving paranoia by scientists who don't want to lose their jobs.

It's the middle managers who still feel that this type of activity is happening, and yet go along with the experiment without expressing their thoughts that irritate me. They figure that as long as they have their position as an intermediary between the two companies, all's right with the world.

Can't say I blame them in this job market.

Permalink to Comment

5. emjeff on November 11, 2009 9:45 AM writes...

"Pfizer isn't actually trying to become a bigger company with a smaller research staff - right?"

Of course they are. Then, in 3 years they'll wonder why projects are taking so long...

Permalink to Comment

6. Anonymous on November 11, 2009 9:47 AM writes...

Do you guys really think that the type of chemistry being done in big pharma cannot be outsourced to China or India. Building heterocycles using Suzuki couplings and similar stuff is not exactly challenging stuff. And big pharma chemist, never made the attempt to encourage their management to go after the real hard stuff (natural product SAR) which has the high risk/ high reward potential or anything else really different or novel. It is difficult to make a drug but do you guys really think that it is difficult to engineer low nanomolar compounds using traditional SAR for the majority of targets that are being worked on in pharma. And no one wnats to touch targets that have traditionally been challenging to optimize against or some other truly novel paradigm.

You reap what you sow guys.

Permalink to Comment

7. Former PFE on November 11, 2009 9:58 AM writes...

Pfizer laid off 50,000 when they bought Pharmacia, so one can expect similar carnage from this acquisition. I call it the "one plus one equals negative 10" theory of trying to build a balance sheet through value destruction.

Pfizer's plan to build a significant relationship with China, as part of a move toward massive selling into the Chinese market place is seriously flawed. Only a leader whose career was built by asking, "Would you like fries with that?" would further his company's downward spiral in this manner. China doesn't honor patent laws, so the logical next step is that China will manufacture and sell drugs for use in China (and elsewhere) without regard to proprietary trade secrets, copyrights, or patents. Pfizer is teaching the Chinese how to make its next blockbuster drugs, with no hope of ever selling any of those drugs in China.

The kicker is that all this outsourcing doesn't actually save money in the long run. It is, however, killing morale and innovation.

Permalink to Comment

8. Calvin on November 11, 2009 10:28 AM writes...

I'm sarcastically entertained by the stupidity on show at Wyizer. It strikes me that there are two things going on with this announcement.

1. Biologics/Vaccines are the future so we don't need no stinking chemists. It's absolutely incredible that higher management have such short memories or lack of insight. While biologics have their not inconsiderable place in pharma it is absolutely certain that there will be a move back towards small molecules at some point when somebody realises the con and biologics doesn't deliver on what it's promising. I seem to remember this same situation occurring in the late 80s.

2. Outsourcing will continue again until it is understood that med chem is not a process. You can't just make massive libraries of compounds of dubious quality at Wuxi and expect drug products to appear. Eventually, it will become obvious that in order to develop drugs your going to need people with considerable creativity and drive to discover drugs.

I really do feel for the people at Pfizer/Wyeth who have been shafted. The sad part is that this is going to happen in other big companies until the cycle turns and who knows how long that will be.

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9. Hey! on November 11, 2009 10:29 AM writes...

@6 As a Big Pharma chemist who's group is still actively doing natural product SAR and working with "nasty" academic looking compunds to try and find new targets/ideas I resent the assumption that all pharma chemists do are suzukis and the like. And even so getting a stubborn buchwald or peptide coupling to go is no walk in the park. Thanks.

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10. MedChem on November 11, 2009 10:37 AM writes...

Did or does Pfizer really have 900 chemists? That's a mind boggling number even for a huge company like Pfizer, which absolutely dwarfs other big pharmas. I'm starting to see what might be going through their upper management's mind...

Permalink to Comment

11. Sili on November 11, 2009 10:40 AM writes...

Sheesh.

As it happened I just vented against this kind of thinking in an application I typed up last night. Though, in my case I commending the company for not being involved in headless mergers like this.

Of course, it wasn't a synthetic position, and even then I have no chance in Belgium for landing it.

Permalink to Comment

12. Hap on November 11, 2009 10:52 AM writes...

The cycle of stupidity goes on. I would figure that competition may not be a bad thing, but I don't know if the people running pharma realize they're training their competition and making it easier for them to get hosed ten years down the line when Congress realizes it isn't costing any American jobs to collectively bargain for gov't drug prices or to actively restrict drug prices. The ability of drug companies to sell products depends on having good products and their trustedness in their target populations, both of which haven't been helped lately, and which cutting research or sending it elsewhere won't help. Their resultant ability to sell other people's drugs probably won't be much better than that of either the companies with the drugs they want or the eventually formed foreign drug firms. Not much preferential sales ability and few products does not bode well for the future survival of (large) drug companies.

Meanwhile, fewer people are likely to want to be chemists because, though our unemployment is likely better than the bulk population, our sunk costs are far greater. In addition, the jobs in pharma are likely to migrate to smaller firms with less job security and benefits and (maybe) decreased pay. Grad schools will (already do) bring in more foreign students (because grant work can't get done with no chemists), driving down wages and job security further once they graduate (or providing highly trained assistance to companies abroad). (This could be altered either by staff chemists through NIH/NSF funding to replace postdocs, perhaps, or by shifts of schools to provide more industrial experience to fill nonpharma jobs, but those options really don't help current professors - they might help to fix a "structural disequilibrium" that is beneficial to them.) Either drug research will leave the US because there aren't enough people to do it or because the jobs (and pay) are elsewhere.

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13. T on November 11, 2009 11:07 AM writes...

Does '900 chemists' refer to just discovery chemists? If so I'm with #11, that seems like a huge number (for so little return in recent years)!?

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14. Ed on November 11, 2009 11:14 AM writes...

Strikes me that there is a huge, once-in-your-lifetime opportunity here for entrepreneurial people (chemists and biologists) who are currently working on teams/projects that are going to get canned wholesale.

Was it only last week that Derek posted on the rise of micropharma?

Take your inventions (drug target +/- lead compounds) find a willing partner (or two) who complements your med chem skillz (biologist/pharmacologist) and go on a funding hunt.

Permalink to Comment

15. pc on November 11, 2009 11:35 AM writes...

If you still use lack of IP protection as a main argument against outsourcing/partnering with Chinese folks in mainland, you'll likely find that fixation of mindset to be a costly mistake down the road. Though it's often said that WX and the like treats their low level chemist staff in a you-know-what-I-mean way (well let's just say that they can and should do better in this regard), they at least to some extent have trained a good portion of their staff in terms of respect of IP/trade secrets. We have interviewed some folks trying to leave these companies, and I was surprised to see that many of them insisted not to reveal detailed information regarding their previous projects, citing the confidential agreement with their employer. You don't see that kind of mindset just a few years ago.

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16. not a chemist on November 11, 2009 11:42 AM writes...

I mean no disrespect, but it appears these
companies are seemingly oblivious WRT
China's record on IP law?

Outsourcing certain IT functions is one
thing - not that China is a big player
in that market - but outsourcing pharma
development might be akin to handing
over the keys to the kingdom.

Permalink to Comment

17. Lawrence on November 11, 2009 12:36 PM writes...

Hap said-

"but I don't know if the people running pharma realize they're training their competition and making it easier for them to get hosed ten years down the line"

"IBGYBG" was a common phrase used by executives who engaged in practices which produced short term profits but resulted in the long term destruction of their companies.

There is no one at the helm.

IBGYBG- "I'll be gone, you'll be gone."

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18. Hap on November 11, 2009 12:56 PM writes...

I think funding issues have eased some for small companies, but funding probably isn't very good right now. (A previous post also cited shifts in VC funding of small companies - probably the post on micropharma). Some companies (for example Pharmacia in Kalamazoo?) helped use their ex-resources to start companies, but I don't know if that's general. The legal constraints cited in "Do I Own This Or What? Answer: What" also might make starting a company with your company's rejected IP a bad deal for chemists, but perhaps that's better than nothing, or maybe it can work out.

I don't know how good IP protection is in India and China. The recent patent prosecutions in India (and the uncertainty in the population whether drug patents are in India's best interest or not) might make me hesitant, though its domestic companies are starting to venture into discovery (and so must be hopeful that their IP will be OK). China will probably do what it has the leverage to do - in the short term, that might be good or bad for IP, though in the long term it probably will want to assure itself the money from the drugs its companies will develop, and so might work to protect patents once they have a good position. Of course, the "money at all costs" industrial underground might present a lot of problems for companies now outsourcing (while executing the worst probably discourages some, the fact that a lot of companies won't be around to reap what they sow and the Chinese gov't's need for money mean that quality and IP might be the victims - if you're willing to sell diethylene glycol as a toothpaste component, regulation and conscience can't be factors).

Permalink to Comment

19. not a chemist on November 11, 2009 1:24 PM writes...

I mean no disrespect, but it appears these
companies are seemingly oblivious WRT
China's record on IP law?

Outsourcing certain IT functions is one
thing - not that China is a big player
in that market - but outsourcing pharma
development might be akin to handing
over the keys to the kingdom.

Permalink to Comment