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

Chemistry and Drug Data: Drugbank
Chempedia Lab
Synthetic Pages
Organic Chemistry Portal
Not Voodoo

Chemistry and Pharma Blogs:
Org Prep Daily
The Haystack
A New Merck, Reviewed
Liberal Arts Chemistry
Electron Pusher
All Things Metathesis
C&E News Blogs
Chemiotics II
Chemical Space
Noel O'Blog
In Vivo Blog
Terra Sigilatta
BBSRC/Douglas Kell
Realizations in Biostatistics
ChemSpider Blog
Organic Chem - Education & Industry
Pharma Strategy Blog
No Name No Slogan
Practical Fragments
The Curious Wavefunction
Natural Product Man
Fragment Literature
Chemistry World Blog
Synthetic Nature
Chemistry Blog
Synthesizing Ideas
Eye on FDA
Chemical Forums
Symyx Blog
Sceptical Chymist
Lamentations on Chemistry
Computational Organic Chemistry
Mining Drugs
Henry Rzepa

Science Blogs and News:
Bad Science
The Loom
Uncertain Principles
Fierce Biotech
Blogs for Industry
Omics! Omics!
Young Female Scientist
Notional Slurry
Nobel Intent
SciTech Daily
Science Blog
Gene Expression (I)
Gene Expression (II)
Adventures in Ethics and Science
Transterrestrial Musings
Slashdot Science
Cosmic Variance
Biology News Net

Medical Blogs
DB's Medical Rants
Science-Based Medicine
Respectful Insolence
Diabetes Mine

Economics and Business
Marginal Revolution
The Volokh Conspiracy
Knowledge Problem

Politics / Current Events
Virginia Postrel
Belmont Club
Mickey Kaus

Belles Lettres
Uncouth Reflections
Arts and Letters Daily
In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« Predicting Toxicology On A Chip? | Main | So, How Come You're So Darn Lucky, Eh? »

September 27, 2011

What Layoffs Have Done

Email This Entry

Posted by Derek

There's an op-ed piece over at Pharmalot that I think that many readers here will find interesting. It's by Daniel Hoffman, formerly employed in pharma, it appears, and now a consultant. He's writing about the waves of layoffs the industry has experienced over the last few years, but he's not talking so much about the people who are gone, as the ones who are left:

In addition to disrupting tens of thousands of lives, the substantial downsizing in pharma over the past two-and-a-half years has changed many companies for the worse. I previously wrote that the guidelines handed down from finance to HR have eliminated many of the more knowledgeable and experienced people at each layoff round because people over age 50 are among the first targets for separation packages. But the dysfunctional legacy is even more pernicious. The resulting culture has created a workforce that is almost entirely at odds with what pharma needs now.

What sort of workforce is that? Hoffman's take is that the people who have survived under these conditions are disproportionately those who don't rock the boat, who keep their heads down, and who keep the top management as unperturbed as possible:

Many of the people remaining in operations deliberately choose not to ask big or important questions, lest their colleagues perceive any fundamental doubt as a threat. The truly adept manage to avoid taking a position on even the most mundane matters, lest someone else equate perceptive questions with disloyalty. Some even find it wise to feign ignorance concerning the elephants in various rooms. The combination of such simulated ignorance, together with the genuine version among the inexperienced survivors, makes the task of determining the smartest guy in the room a purely theoretical exercise.

I think that these are tendencies built in to most large organizations, but it wouldn't surprise me a bit if the shakeups of the last few years have exacerbated them. Many people, when the pressure is on as hard as it's been, decide that the first thing they have to do is try to hang on to their job. Anything interesting and risky can wait until after the mortgage payment has cleared and the tuition checks have been written. The behaviors most associated with "Don't get laid off" are not the ones that are best associated with "Keep the company going", much less "Discover something new". That last set of behaviors, in fact, might be one of the first to go, along with the people who exemplify them.

Hoffman has an aggressively cynical take on the motives in other parts of large organizations - and while I wish I could say that he's completely wrong, there are indeed places - too many - that operate on these general principles:

. . .At the top, finance sets the strategic direction. The goal of finance, paramount to everything else, consists of keeping senior management in control of the company. Forget the blather about shareholder value, customers, the community and medicine for the people. Everyone outside the boardroom is the enemy. . .Reality for CFOs involves long-term product and business development approaches that would create several quarters of flat or negative earnings. In their doomsday scenario, that would prompt the board to replace management.

And that's the tricky part of capitalism. One of the philosophical reasons that I'm such a free-market kind of person is that I think that it works with human nature as it really is, without needing any magical-thinking schemes to suddenly transform or improve it. People tend to act in their own self-interest? Fine, let's use that to try to derive benefit for more than just one person at a time. But it goes without saying (or should) that not all self-interested actions can be so harvested, which is why I'll never be anything close to an anarcho-libertarian.

Philosophy aside, what we're seeing in some drug organizations is this sort of self-destruction. The fix they find themselves in leads to behavior that makes the problems worse, or at best does little to overcome them. This, taken down to its individual basis, is what Hoffman's piece is arguing. And although his editorial can also be fairly characterized as a bitter rant, that doesn't mean it isn't true. Or at least more true than it should be.

Comments (37) + TrackBacks (0) | Category: Business and Markets | Drug Industry History


1. drug_hunter on September 27, 2011 8:09 AM writes...

Related issues are fear, uncertainty, and doubt (FUD). When I talk to senior medchemists across the industry, they all talk about how fear of layoffs, re-orgs, closing down of disease areas, and the like, cause paralysis. Teams are afraid to move - not just because they don't want to "rock the boat" as Derek says but because they really don't know whether they and their projects will be around in 3 months. So complicated experiments are less likely to get done, collaborations are less likely to get started, and risks won't be taken. Why bother?

Reminds me of the Monty Python "confuse a cat" sketch --

His condition is typified by total physical inertia, absence of interest in its ambience - what we Vets call environment - failure to respond to the conventional external stimuli - a ball of string, a nice juicy mouse, a bird. To be blunt, your cat is in a rut. It’s the old stockbroker syndrome, the suburban fin de siecle ennui, angst, weltschmertz, call it what you will.

Permalink to Comment

2. exGlaxoid on September 27, 2011 8:18 AM writes...

I remember exactly the behavior described by people I worked with. If you gave any suggestions for improving a process, they would come back with "It works now and nothing could be better" or "why change something when it works" or "are you saying that we are doing something wrong now?"

There was no interest in new ideas, improvements, or change unless it was mandated from above. That was one reason that management seemed to like the researchers from China, as most of them were terrified to speak, much less "criticize" or suggest changes to the status quo.

So until the shareholders demand long term returns rather than short term imaginary profits (after the "one time" charges from layoffs/reorgs are factored out of current poor returns) I don't see much changing.

Permalink to Comment

3. RespiSci on September 27, 2011 8:47 AM writes...

I'd like to see if in a few years whether case studies at business schools include examples of the downward spiral of big pharma and more importantly the contributions of mismanagement and a finance-focus viewpoint made to this downward spiral. Only when business management can honestly assess their contribution the decline, will there be a chance for change.

Permalink to Comment

4. darwin on September 27, 2011 8:57 AM writes...


Permalink to Comment

5. Vader on September 27, 2011 9:10 AM writes...

One of the first casualties of fear, uncertainty, and doubt is the long-term perspective. When shareholders have no idea what the future holds, they will demand immediate returns. Cash it in while the cashing in is good.

This is damaging to long-term prospects, of course, and thus contributes to the downwards spiral.

Permalink to Comment

6. quintus on September 27, 2011 9:15 AM writes...

I think that Hoffman has hit the nail right on the head; "black sheep" or those who raise their heads are doomed. Quote from one of my superiors "if you don't like it the door is over there."

Permalink to Comment

7. petros on September 27, 2011 9:32 AM writes...

And when you hear stories about some companies, not just pharma, that those who disagree with CEO's tend to be surplus to requirements very quickly.

In the UK one (now bailed out) bank fired its head of compliance for suggesting strategies were to risky!

Permalink to Comment

8. Curious Wavefunction on September 27, 2011 9:39 AM writes...

I wonder if this kind of destruction based on the pursuit of short-term goals at the cost of long term productivity and prosperity is the logical end of what we call "capitalism".

Permalink to Comment

9. Sundowner on September 27, 2011 10:13 AM writes...

As you sow, so you reap.

Very recently I heard that a big pharma slew a long term collaboration with a group, because though their metrics were excellent and they were according to the management 'the best collaboration', they were expensive.

That is, you are telling everybody that in the end working hard, good quality and results in your work... do not pay dividends. What is important is to be cheap. So in the end you got a cheap collaboration where quality is not so important.

Permalink to Comment

10. 3TC on September 27, 2011 10:40 AM writes...

There's a great article in Nature (15 September 2011) entitled "The evolution of overconfidence". The last line of the abstract is classic: "The fact that overconfident populations are evolutionarily stable in a wide range of environments may help to explain why overconfidence remains prevalent today, even if it contributes to hubris, market bubbles, financial collapses, policy failures, disasters and costly wars"

Did these guys once work for Big Phamra?

Permalink to Comment

11. TJMC on September 27, 2011 10:47 AM writes...

Great story. Reminds me of many interactions in the past year, five years, decade... My gosh, I remember dealing with the same issues in the 1980's...

This blog has a great following, and I would love to hear other's stories of how they advanced provocative change recently (past five years) or 10-20 years ago to see how different (?) things truly are. I suspect we can learn from these, as opposed to rants.

For myself, I will recall and post 1-2 stories. Maybe we can compare cultures and strategies for advancing the business and the interests of the patients despite the abovedescribed situation.

Permalink to Comment

12. luysii on September 27, 2011 11:16 AM writes...

In addition to the above, when you are under stress and/or depressed you don't think well. An example

I was a doc in the Air Force from '68 - '70. Another 2 year guy like myself came to see me (a neurologist) because of poor memory and difficulty concentrating. He didn't appear any more stressed than any other 2 year officer.

He was a mathematician involved in running the computer center -- which were pretty primitive back then -- NASA's computers at the time had a whopping 64 kiloBytes of memory. I didn't find much wrong on physical exam, but having a math background I asked him what the integral of sin x was (the mental status exam is part of a neurological exam, and should be part of every physical exam). He couldn't tell me -- clearly something extremely significant for a mathematician. So I was in the process of setting him up for a carotid angiogram (which, at the time, involved a direct stick of the carotid artery in the neck, and had a risk of 1 - 2% of CAUSING a stroke).

He was getting dressed and I was filling out the paperwork, when for some reason I emoted about the paperwork of the Army (little did I know what insurance companies later would impose on the private practitioner). He then opened up about how much he hated his role. Being an officer in charge of the unit, he had to discipline the enlisted men under his command, something he hated, along with the paperwork.

I had the smarts to recognize what was going on, and sent him to a friend in psychiatry and things cleared up pretty quickly.

He came by to thank me when his tour of duty was up, and told me where he was going next.

It was the Institute for Advanced Study in Princeton.


Permalink to Comment

13. pete on September 27, 2011 11:25 AM writes...

Another effect of the lay-off syndrome that I find most troubling is that I really can't be anywhere near as enthusiastic as I'd like in speaking to my kids about a career in research science. I mean, I've had a fun time in my bench career and beyond - and I try to take a long view that things will turn around for the better for American researchers - but the ongoing grind of lay-offs/shut-downs/corporate musical chairs makes it a little hard to talk-up the excitement of doing start-up science without laying on some "Truth in Advertising" caveats.

We've seen it here, too. The responses by us "elders" to anxious career queries by current Grad Students and Post-Docs, where the consensus opinion - at best - seems to go along the lines of, "Keep your eyes wide open".

Permalink to Comment

14. Gale on September 27, 2011 12:05 PM writes...

There is no spoon. There are no layoffs.

President Obama and friends plan to hand out a green card to every foreigner who graduates from an American University. Given foreigners are 50% of the scientific population; this will reduce US job seekers prospects by half.

Universities will be able to continue to expand their infrastructure and perhaps even begin charging tuition for grad programs in chemistry.

It is apparent that this blog and many others are providing false statistics to their readers on the layoffs and jobs pictures in the sciences. Surely the President and congress have the best interests of the American public in mind. To say otherwise would be treasonous.

Jobs are plentiful as you no doubt hear from the silicon valley talent wars.

Permalink to Comment

15. chris on September 27, 2011 1:27 PM writes...

One other aspect of the layoffs is that I've found, at least in the UK, that many of those smart people have now found roles in the CROs.
The CROs seem to have picked up those scientist who enjoy problem solving and the challenges thrown up by new projects.

Permalink to Comment

16. Nick K on September 27, 2011 1:31 PM writes...

Anyone who doubts what Hoffman has to say only needs to read about the recent revelations of the behaviour of senior management at Pfizer under Jeff Kindler.

Permalink to Comment

17. orgchemist on September 27, 2011 1:37 PM writes...

@ Gale. Seriously? You're using that arguement? Treason? Do you really think that the president and congress have what's best in mind for the nation? They, like other politicians, are only concerned with their own miserable careers and to hell with anyone else. What government are YOU watching? This isn't silicon valley mind you, it's pharma. And if you really believe that cool aid you chug, I have some beautiful oceanfront property in Nevada to sell you.

Permalink to Comment

18. startup on September 27, 2011 2:11 PM writes...

@2. I've always though that docility is an important factor that helps to drive jobs overseas. I even wonder sometimes if there's a corporate memo out there somewhere which quantifies it. "It should also be noted that our consultants suggest that the obedience quotients for sites A and B are 3.9 and 2.4 respectively, thus potentially lowering labor management costs at site A by 20-25% as compared to site B."

Permalink to Comment

19. J on September 27, 2011 2:43 PM writes...

I thought Gale(#14) was going to be the dumbest one on the board, until I read orgchemist (#17). Reading comprehension, dude, it's sarcasm. And blaming any of these long term trends on our current administration (lackluster as their efforts thus far may have been) is just, well, dumb.

Permalink to Comment

20. Anonymous on September 27, 2011 3:32 PM writes...

At my beloved big Pfarma, it is not the 'don't rock the boat' culture that is so destructive but the 'who can BS the best' that is sinking it. The industry has a problem because BS is only really rooted out at PhII or PhIII - by this stage the BS'er has moved on/up and never has to live with resultant failure. Despite the endless project reviews right up to the top (and many people do speak up and say 'this will never work') it is the culture of 'needing to show something quickly' that has created this BS'ers paradise. While there is talk to find the cause of the high failure rate and get a new strategy, in the end the middle managers revert to type and a new round of BS is born. We are finished.

Permalink to Comment

21. Anonymous on September 27, 2011 9:00 PM writes...

The author Hoffman must have visited Rahway recently.

Permalink to Comment

22. Anonymous on September 27, 2011 9:25 PM writes...

This piece although cathartic, was so well articulated that it hit close to home and reinforced why I left pharma.

I think the all big corporations with R&D face the same problems, pharma is just so vulnerable due to it's long product development cycle and high risk. Other industry's are able to quickly see the effect of changes positive/negative.

+1 to the effects of stress. Being stress free lately I've noticed a boom in intellect an creativity. R&D really needs that, although it seems unproductive, you have time to take a step back and REALLY think. Can't imagine going back to those days of uncertainty and felling sick to my stomach.

I've always subscribed to do your best, speak out, and do what you think is best for the company. If they lay you off for that, then you know the ship is going to sink any ways. Life is too short. Stay frossty my friends.

Permalink to Comment

23. TJMC on September 27, 2011 9:26 PM writes...

I thought about my challenge to share stories. Reflecting on some past success and "failures" to push new ideas revealed maybe a usable strategy for "black sheep'.

In the past I pressed for "doing things smarter" in a variety of ways, but mostly survived by not being TOO provocative while things were "going well" for leadership. Or just was too lowly to register "fear" from others. Just keeping the concept and message active was good enough. Then when crises struck and leadership scrambled for any lifeboat, I mused "remember the xyz option" we (I) raised back when?... I see now that several big changes succeeded in that way.

An example: Running bioequivalence analyses in the 1980's, I found the process tedious, especially the software that came with our "state of the art" HP5985 GC/MS/MS. The head of my division came in and saw I was working on some reprogramming in parallel between runs (others read novels.) Explaining to his question what I was doing, he said to stop, and "I do not want to see you doing any more of that". Still, the problem bugged me, especially when I found there were flaws in the algorithms. Since we were on the critical path for the most important drug in our pipeline, we had to work shifts. The evening shift was a good time to polish my revisions - especially in that management was "home".

It became apparent that our process was going to delay the filing by 4-5 months, and we brainstormed how to increase throughtput. Buying a second unit would also take 4-5 months since they were so new. I raised the xyz option: "remember the software revision I was working on?..." It halved our processing time and allowed for batch reprocessing (not available on that HP system for another five years.) Accepted once validated and we met our deadline - to the surprise of everyone.

The difference? Timing. Crisis mindset of managment. Is this similar to others experiences? What works today(?) since it seems the article is making everyone gun-shy, and yet face continual crisis?

Permalink to Comment

24. bbooooooya on September 27, 2011 10:00 PM writes...

"The CROs seem to have picked up those scientist who enjoy problem solving and the challenges thrown up by new projects.The CROs seem to have picked up those scientist who enjoy problem solving and the challenges thrown up by new projects."

At least those who are happy to do so at the reduced salaries that permit the CROs to be profitable. These people are just a step en route to a job in the PRC

Permalink to Comment

25. Ed on September 28, 2011 12:43 AM writes...

#24 My salary cut going to a UK CRO was "only" 10%. What I don't like is the fact that I dont give a crap whether the project works out or not.

Permalink to Comment

26. sepisp on September 28, 2011 5:35 AM writes...

Funny how I tend not to discuss pharma in the Internet with pharma shareholders. They're idiots. Case in point, a local company had the patents of their current portfolio expire, so they decided to shut down the pipeline. Shareholders' opinion? Everything's fine, since good returns are expected this year. No wonder, the layoffs temporarily increase profit.

Permalink to Comment

27. MedChem on September 28, 2011 9:58 AM writes...

#20, 22:

I'm so fed up with the BSer's and self-serving intellectual conmen at my once beloved bigpharma that it's just a matter of time that I quit. Ed, are things any better on the CRO side?

Permalink to Comment

28. Ed on September 28, 2011 11:40 AM writes...

As a bench scientist, there is almost a complete lack of BS at my CRO. Expectations are reasonable, just don't expect to be loved and appreciated - management know that you are replaceable. Hell, every chemist knows they are replaceable.

I'll probably not last too long at it (lost the passion, especially now I work for some invisible other who I never meet) - but if you want to crank out compounds, intermediates, it ain't too bad.

Permalink to Comment

29. Rock on September 28, 2011 4:39 PM writes...

@20 &22
"I've always subscribed to do your best, speak out, and do what you think is best for the company. If they lay you off for that, then you know the ship is going to sink any ways."

I have also subscribed to that philosophy. However, after back-stabbing me for calling BS, BS, my VP told me "Both you and xyz (my boss) believe in doing what is best for the company. I believe you do what I tell you to do". My boss was soon gone, and I was cut 18 months later. The VP is still there with the sinking ship.

Permalink to Comment

30. exexec on September 28, 2011 8:45 PM writes...

A good article with some salient points in the comments. A couple of further thoughts:

Gale #14 may be sarcastic, but China has its "thousand points of light" program going to lure back all of the western-trained scientists. Which would you rather: having the smartest colleagues working by your side, or only having the coddled gringos?

The column misses another fundamental point about the layoffs, which is their causation by two factors: M&A, and lemming-like strategizing.

M&A eliminates half of the senior executive positions; what gets left over are: 1) the BS'ers, as pointed out, but also 2) the loyalists to upper management.

Also core to the issue is the follow-the-consultants installation of similar R&D, manufacturing, marketing strategies at the major pharma: focus on the same few disease areas, aspire to move into the same biologics and other modalities, move into the same emerging markets, etc. Guaranteed to have everyone regressing to the mean. The truly bold scientific innovation strategies which will keep US/EU pharma leading the world is sadly missing as everyone hunkers down in conventional me-tooism.

Permalink to Comment

31. J on September 29, 2011 12:24 AM writes...

First, go to h*ll for the lovely juxtaposition of "the smartest colleagues" and "only...the coddled gringos". Yes, yes, I know you meant the smartest from all backgrounds (I hope at least). But what an executive-y way to put it...
However, you are right that it makes no sense to train people up to first-class standards, just to send them off to be our rivals. Hopefully that ship hasn't sailed.

Permalink to Comment

32. Dan Spinato on September 29, 2011 1:19 PM writes...

We are in for some tough times, this recession definitely suck.

Permalink to Comment

33. Innovorich on September 29, 2011 3:09 PM writes...

Agree with #15.

Ed (#25 & 28) - it is definitely still possible to care about projects from within a CRO - the end result for you is the same as at a big pharma - i.e. a drug gets made, people get cured, and you get to keep your job!

Everyone within big pharma was always replaceable - they were just too sheltered/shuttered to realise it.

There's a rule-of-thumb in HR - for every 10% you lay off, another 10% will leave or become dysfunctionally unproductive. Result: if you lay off 50%, your company is toast!

Permalink to Comment

34. Anonymous on September 29, 2011 4:17 PM writes...

@exexec "Which would you rather: having the smartest colleagues working by your side, or only having the coddled gringos?"

I think the question is which would YOU rather. Your colleagues [and likely yourself] created this foreign labor dependency of a situation and now you'll face the consequences of it. Namely the downsizing of your companies as goals are missed, and yourselves being laid off with no marketable skills for alternative industries. ;-)

Permalink to Comment

35. Wyatt on September 29, 2011 7:50 PM writes...

@31 J said "However, you are right that it makes no sense to train people up to first-class standards, just to send them off to be our rivals."

Only an executive or professor thinks like that. You would rather them remain in the USA so they can compete with taxpaying US citizens for a limited number of positions?

You blithely assume there are jobs being created for Chinese PhDs as soon as they emigrate home?
Actually, any jobs being created over there are the result of outsourcing from the USA.

Gee, I hope we lose all of the foreign 'best and brightest'. Most of them are only good for repetitive grunt work.

Now go back to flogging your students.

Permalink to Comment

36. Anonymous on September 29, 2011 11:44 PM writes...

To my friends who have been affected by layoffs as I have. Here's a poem / insight that was instilled in me by my mom while I was a child. Now I see the utility.. I hope it can help you as well. Take care!

Permalink to Comment

37. RandDChemist on September 30, 2011 10:51 AM writes...

The boardrooms do control everything. Things are done in the name of shareholder value, and it’s true as long as the shareholders are in the boardroom. The deals they cuts benefit them. Boards are incestuous and are the new aristocracy. They live in a reality distortion bubble.

Pharmaceuticals are high risk and anyone ever involved knows that. Venture capitalists used to be about risk, but no longer. While it makes sense for a short time, no guts no glory.

Shortcuts won’t do it. The latest fad (combi-chem, genomics, outsourcing) has never will not solve the problems. There are tools that are only as good as how they are used. The government is not the major source of the problem, aside from now over-compensating for being in bed with the power players in pharma.

There is no magic bullet regardless what those trying to sell a drug tell you. Greed took over and things were oversold. The FDA played along. The public accepted it and fell into the trap. It needs to be about high caliber science that leads to benefiting the patient.

Everything has risks. It’s a matter of balancing risk with benefits.

These issues are not contained solely to big pharma. People, especially smart and powerful people, tend to develop an aversion to truths they don’t like because it could negatively impact their own position. That’s when politics ruins a potentially good thing. BS and politics go hand-in-hand.

Permalink to Comment


Remember Me?


Email this entry to:

Your email address:

Message (optional):

The Last Post
The GSK Layoffs Continue, By Proxy
The Move is Nigh
Another Alzheimer's IPO
Cutbacks at C&E News
Sanofi Pays to Get Back Into Oncology
An Irresponsible Statement About Curing Cancer
Oliver Sacks on Turning Back to Chemistry