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Derek Lowe The 2002 Model

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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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« The Fox's Lament | Main | Coming Up in the World With CROs »

April 14, 2011

Total Pharma Job Cuts

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Posted by Derek

Matthew Herper has the numbers, as tallied up by a consulting firm. Since 2000, there have apparently been about 300,000 layoffs in the drug industry. It's important to remember that a good number of those people have found other jobs in the business - I'm one of them. But there are a lot of people who haven't.

Those exact figures, and the balance between them, are something we'll probably never be able to get a good read on. But there's no way that everyone found a new position, and I don't see any way that new hires could have filled the gap, either. The total head count of the industry is down over this period - not hugely, but it's down, and it's not like we've cured a huge slate of diseases over the last ten years and put ourselves out of business that way.

As you'll see from Matt's table, 2009 seems to have been the absolute worst year so far, with 2010 still in second place. (And since those have come on top of all the cutbacks in prior years, it tends to make them seem even harder). I was one of the 15,638 laid off in 2006; several hundred of my colleagues helped to swell that total. But 2006, in retrospect, looks like an afternoon by the lake compared to what came after. . .

Comments (30) + TrackBacks (0) | Category: Business and Markets


1. Hap on April 14, 2011 9:05 AM writes...

2009 and 2010 are afternoons by the lake...where the Soviets dumped the waste from their nuclear weapons plants. Or maybe afternoons by the Aral Sea.

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2. NoDrugsNoJobs on April 14, 2011 9:10 AM writes...

When I look up my former, now laid-off colleagues whereabouts, I see that the large majority are either still laid off or have switched to other things completely away from medchem. Very, very few are still working as medchemists. If you have a good job as a medchemist, please cherish it!

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3. Nick K on April 14, 2011 9:20 AM writes...

It would be most interesting to look at the breakdown of job losses by job type and geography. I suspect that this would show a dramatic shrinkage of headcount in R and D and in the West (US and Europe), with a corresponding increase in Sales and Marketing in the emerging economies, principally China and India.

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4. Chemjobber on April 14, 2011 9:54 AM writes...

Someone smarter than me should write a book about this mess.

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5. NoDrugsNoJobs on April 14, 2011 10:14 AM writes...

Chemjobber - I think we should nominate Derek for that.

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6. David P on April 14, 2011 10:26 AM writes...

@NoDrugsNoJobs - seconded!

OK Derek, get to work. :)

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7. Anon on April 14, 2011 10:40 AM writes...

I was one of the 2010 medchem layoffs. I've had two medchem opportunities to work in China presented to me. I am looking to change careers. I agree with Nick K. Cherish what you've got.

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8. Anon on April 14, 2011 10:41 AM writes...

I was one of the 2010 medchem layoffs. I've had two medchem opportunities to work in China presented to me. I am looking to change careers. I agree with Nick K. Cherish what you've got.

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9. HelicalZz on April 14, 2011 10:58 AM writes...

The sky is falling, the sky is falling, run and tell the king!

My comments from the other blog:

"What is the breakdown by function i.e. how much from R&D and how much from marketing? You note that total employment didn’t decrease as much as the cuts, so how much did it decrease and where were jobs then added? What is that as a % of total industry employment? Is this perhaps balanced by increases in employment in related industries like CROs?

In other words, its a nice list, but hardly one that supports your closing lament. I see transition more than collapse."
I bet more of these jobs were sales jobs than R&D.


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10. pete on April 14, 2011 11:34 AM writes...

@ 9 Helical
re: transition/collapse & job loss numbers in R&D vs. Marketing/Sales:
Since the fruits of R&D and of Marketing/Sales, serve to support each other, then a big loss in US Pharma Sales jobs is surely going to suggest impending badness for R&D jobs too, no? That is, unless there's a compensatory gain in offshore Pharma Sales activities, which I don't believe is happening in a big way.

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12. johnnyboy on April 14, 2011 12:30 PM writes...

>then a big loss in US Pharma Sales jobs is surely going to suggest impending badness for R&D jobs too, no?

Hmm, not so sure about that. If a company drastically cuts its sales force, maybe (just maybe) it might decrease its sales. But the slack would be taken up by the products of other companies, since in theory docs would still have to prescribe something. Sales numbers for the industry as a whole may not change that much as a result.
From my general impression of pharma job cuts, up till about 2-3 years ago the large majority of cuts seemed to be in sales/marketing, and it's only in recent years that R&D has really been affected. Like #9, I too would like to see additional data to put this in perspective, like how did the total employment numbers change in the same period, and a breakdown by sector.

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13. HelicalZz on April 14, 2011 12:30 PM writes...

@10. Pete

Not necessarily. Take a look at this commentary from late 2010, presumably using the same source as Matthew Herper (Challenger, Gray and Christmas).

It implies that pretty much all of the 2009 and 2010 job losses noted were in sales. And contains:

"Drug makers, in turn, are funneling funds from sales and marketing into scientists hunting for the next big breakthrough. For example, since 2007, the share of expenses going to sales at drug giant Novartis has dropped from 29.2% to 25.2%. And Novartis recently announced that it is going to invest more in R&D."

Anecdotal, but %s of revenues for R&D and SG&A are available for all these large public entities. The ones I've looked at show SG&A taking more of a relative hit than R&D. And while sales aren't going 'to China' (not the jobs anyway), they are going to iPads and differently focused broader targeted sales tactics. Sales is indeed being outsourced and practices changing, just differently. InVentiv health is one example.

Look, I truly don't mean to be trollish here (though perhaps at times rabble rousing), but critical consideration of presented data is part of the pedigree of most here. This one didn't pass muster IMO, and sure didn't support conclusions.


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14. SteveM on April 14, 2011 12:52 PM writes...

Here's a good exercise.

I got out of organic synthesis 25 years ago. I did a LinkedIn search of the Ph.D. chemists I knew then to see what they are up to now. So now are 50+ years old. Most are "consultants" or something. Few are actually still working in Pharma. Anecdotally, at least for that cohort, it doesn't look good.

You guys that have more recency in Pharma may want try it and see what's what with your former associates.

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15. NoDrugsNoJobs on April 14, 2011 1:05 PM writes...

SteveM - thats been my finding as well - hell, even I am out of medchem....

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16. Jason on April 14, 2011 1:27 PM writes...

I think this highlights the sheer lunacy of the American Chemical Society chemist unemployment rate of 1.5% or whatever it is.

If you poll only university professors and don't count people who've can't find a job after 6 months (they aren't real any more for some reason) then you can always arrive at a ridiculously low figure.

The BLS also contributes to the fabricated numbers by using similarly slanted figures. it's all a ploy to shove more people into the sciences to lower wages.

Any improvements in the aggregate US job figures recently have been due to 'not counting' the dropouts.

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17. pete on April 14, 2011 2:01 PM writes...

@ 13 Helical
Good points. And regarding changing Sales approaches, I suppose there's a parallel between the demise of the seasoned drug-rep and the car salesperson. Nowadays most people can jump ahead to the car purchasing stage solely based on information from online resources. Maybe that's the new scenario for Docs purchasing new drugs based on what they found on their iPad.

Anyway, regarding more informative breakdown of job loss statistics -- sounds like we'd all agree there are so many moving parts amidst all the changes in Pharma/Biotech/CRO- land over the past 2 decades, that it deserves PhD thesis-worthy analysis of the numbers and of What-Led-To-What.

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18. Mike on April 14, 2011 4:26 PM writes...

@ 17 said "sounds like we'd all agree there are so many moving parts amidst all the changes in Pharma/Biotech/CRO- land over the past 2 decades, that it deserves PhD thesis-worthy analysis of the numbers"

The jobs are gone and not coming back. Pfizer pays almost no US taxes on its foreign earnings. No detailed analysis needed (see link)


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19. Anonymous on April 14, 2011 5:25 PM writes...

Why should Pfizer pay taxes on its foreign earnings? They have to pay taxes to the foreign government. Why do you think double taxation would help you out?

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20. Rick on April 14, 2011 5:26 PM writes...

I might be able to shed some light on the fraction of employees laid off by function for one relevant portion of the employment downturn. After I was laid off in 2008, to keep my mind busy (i.e. keep from losing my mind), I started the morbid hobby of avidly following the press announcements of layoffs, tracking the number of employees laid off and the functions (R&D, Sales, Manufacturing, M, G & A). I religiously checked the press releases every day for one full year (March, '08 - February, '09) before it got too depressing. I relied on the companies' own designations for R&D, sales etc. as they appeared in the press releases and I should note that not all companies reported the functions affected. Here's what I came up with (IMPORTANT CAVEAT, I AM JUST AN AMATUER, NOT A TRAINED BUSINESS OR NEWS ANALYST):

Total reported layoffs 64,304
Layoffs with functions clearly reported 23,932*

Reported R&D layoffs* 8,208 34.3%
Reported Sales layoffs* 12,323 51.5%
Reported Manufacturing layoffs* 3,060 12.8%
Reported M, G & A layoffs* 341 1.4%

Note that 36% of the announcements specified the functions clearly enough for me to make specific assignments to functions. Assuming that the remaining 64% of announced layoffs were composed of a substantially different mix of functions (i.e. the percentages remain the same), you get the following numbers of employees laid off by function industry-wide from 3/08 - 2/09:

R&D 22,056
Sales 33,116
Manufacturing 8,230
M, G & A 900

I also tried a similar analysis following hiring trends, to try to get a "mass balance" assess how many of those layoffs were offset by hiring elsewhere, but I couldn't get good enough or comprehensive enough info from the sources I had. However, based on my effort, I would make an educated guess that far fewer than half of the layoffs were offset by hiring, possibly less than 25%.

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21. Rick on April 14, 2011 5:31 PM writes...

"Assuming that the remaining 64% of announced layoffs were composed of a substantially different mix of functions (i.e. the percentages remain the same)..."

Should read,
"Assuming that the remaining 64% of announced layoffs were NOT composed of a substantially different mix of functions (i.e. the percentages remain the same)"


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22. Anonymous on April 14, 2011 5:39 PM writes...

Scientists think they are getting screwed over by sales.

Sales thinks they are getting screwed over by scientists.

Management laughs as they both don't realize that they are everything is moving to China.

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23. Anon for self-interest on April 14, 2011 6:50 PM writes...

I think these numbers are low. Many companies don't make official announcements of all the cuts made, going along with an omnipresent forced attrition through tricks like restricting budgets and efficiency objectives, but without overt job cut objectives set. I know of dozens of folks who have been forced out of big Pharma by these tactics, and just today heard of more from one of the biggest co's, once again, which will force dozens out the doors without any official company acknowledgement. So much for honesty in mangement, transparancy of intent and action from the top.

I also don't believe in the claim that the vast majority of these people have found equivalent jobs doing drug R&D. Many people I've known became tired, unwilling to play the game of "survival" again in big pharma, quite a number are offering to do consulting (with various degress of being busy), some have tried to get into teaching or academic research, some have gone back to school to get MBAs, law degreees, even MDs, others simply have decided it's no longer what it used to be and have elected to retire from the Pharma R&D game board, tired of their lives being controled by others who are rolling the dice to decide the potential of future careers...or not.

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24. Anonymous on April 14, 2011 7:36 PM writes...

It looks like 2011 will not be bad if the trend for the first three months continues?

Then again there is no reason to think something like this is going to be linear of follows any sort of trend.

And to add to the anecdote game. Most of my friends from grad school who went to work for Big Pharma (medchem and biochem) are still gainfully employed. My cohort isn't the 50 y.o. one though, and it's quite younger.

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25. Clenbuterol on April 15, 2011 12:33 AM writes...

Thanks for the review on this topic, i was searching this for a long time.

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26. Ash on April 15, 2011 3:30 AM writes...

300k out of how many? I assume that is a worldwide statistic. HOw many people are thought to work in Pharma worldwide?

If it is 300k out of 1 mil. that is alot. If it is 300k out of 10 mil. then you are beating out other industies % layoffs.

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27. Rick on April 15, 2011 6:55 AM writes...

Ash, #26,
Important point, I'm glad you asked for this perspective. According to the U.S. Bureau of Labor Statistics (, "Pharmaceutical and medicine manufacturing provided 289,800 wage and salary jobs in 2008." It's a little harder to find worldwide employment data because of differences in the way nations define their industries. I'd say it's very sobering to consider that the number of people laid off since 2000 (even worldwide) is larger than the total number of pharmaceutical employees in the U.S. at a given time (2008). In other words, the industry has laid of an entire "United States-worth" of its employees over this past decade.

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28. Rick on April 15, 2011 7:04 AM writes...

In my previous post, I forgot to make it explicit that the Bureau of Labor Statistics numbers include R&D, sales, G&A; the designation "Pharmaceutical and medicine manufacturing" is a bit misleading. For more detail, see Table 1 at the BLS web site:

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29. Oz on April 18, 2011 3:43 AM writes...

There are good and bad things when lot of people are floating around. You need to be aware in recruitment and not end up as we did AZ in Sweden Mölndal. The HR was totally fooled when recruiting a HoD to MedChem. He was skilled in science but a disaster leading people. He got several warnings and a personal coach to deal with his behavior. But he did not change his behavior which led to a overnight quick dismissal. Now we a looking for a new one, hope for better luck this time.

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30. Anonymous on April 26, 2011 7:27 PM writes...

Yaaa...there are good people floating around...they were the victims of politics, favoritism and bias of inept managers who mentioned their names when it came to layoffs...Perhaps threatened by them and their knowledge???? So, who survived all these layoffs???? In many cases, the boys. The talentless schleps who were protected by the management. We all see what is going on...however, always remember...justice prevails in the end!!!!

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