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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline

« NCPharma: Changing the Drug Industry How, Exactly? | Main | A Note to Andy Grove »

October 25, 2011

Novartis Announces Cutbacks

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Posted by Derek

Novartis has had fewer examples of the layoffs and closures that have beset the rest of the drug industry, but no one's immune. Reports are that they're eliminating 1,100 jobs in Europe and about 1,000 here in the US (and here's more from the Basler Zeitung, if you read German). And meanwhile, yes, 700 positions will be added in India and China (not research - data handling and trial management).

This isn't on the scale of some of the Pfizer layoffs, but it's bad enough. And is anyone willing to think that this will be the end?

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


COMMENTS

1. Quintus on October 25, 2011 9:14 AM writes...

This has actually been silently going on now for the last 12 or so months, in dribs and drabs, they managed to remove a further 2500 jobs without the local press noticing, which is strange!

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2. Terry on October 25, 2011 9:26 AM writes...

they added the jobs in china, it is great!
ther is a bright future in china for pahrma jobs

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3. quintus on October 25, 2011 9:34 AM writes...

That is typical of them but the say " research will remain in Basel". A statement I don't believe, at least in the mid/long term.
The move to the east is the worst thing they have done in many years, and it still continues. Sooner or later they will learn, and who suffers? Certainly not Vasella etal.

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4. Anonymous on October 25, 2011 9:58 AM writes...

Jeez. Seems Novartis are just following the pack. Quintus, you seem to be in the know.... Is R&D in Basel constantly being chipped away quietly?

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5. Quintus on October 25, 2011 10:37 AM writes...

@4 It's mostly R&D but not all also production.
I think one of the only safe departments is HR!

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6. Anonymous on October 25, 2011 10:51 AM writes...

What money the UK R&D folks relocating to Basel will be "surplus to requirements" in a couple of years time? What a mess

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7. quintus on October 25, 2011 10:59 AM writes...

Yep, they might want to think twice about any move unless it's into management etc. Switzerland sounds great, but!

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8. Ed on October 25, 2011 11:31 AM writes...

What parts/how many of Novartis UK R&D are meant to be relocating to Basel?

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9. Gary on October 25, 2011 12:37 PM writes...

It would be interesting to find out what Pharmas total R&D population in China and India are presently.

Has it ticked up in population every time a US layoff has occurred?

If this is true then from a business perspective there have not been any layoffs. There's just been a shift in the geographic focus of the enterprise.

My guess is that the end game is 90% of all R&D positions will shift abroad. Even if the pay were equal with the USA, the environmental/legal aspect makes a compelling case for outsourcing.

In China you can dump your waste benzene down the sink.

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10. David Formerly Known as a Chemist on October 25, 2011 2:19 PM writes...

If it's any consolation, at least Novartis is being honest about their intentions. They're shifting work to China to take advantage of cheaper labor costs, not to (as the common excuse goes) "be closer to the growing Asian market".

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11. Anonymous on October 25, 2011 2:32 PM writes...

"In China you can dump your waste benzene down the sink."

Are Chinese chemists somehow unaware of the hazards of using benzene, never mind disposing of it down the sink?

Or is that just bollocks?

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12. Anonymous on October 25, 2011 3:19 PM writes...

of course they are. So what ? feeding babies melamine was a viable business option too.

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13. Anonymous on October 25, 2011 5:56 PM writes...

I've been through so many rounds of this crap that I don't even care anymore. So without further comment, here's some Iron Maiden lyrics:


In a time when dinosaurs walked the earth
When the land was swamp and caves were home
In an age when prize possession was fire
To search for landscapes men would roam.

Then the tribes, they came to steal their fire
And the wolves, they howled into the night
As they fought a vicious angry battle
to save the power of warmth and light.

Drawn by quest for fire
They searched all through the land
Drawn by quest for fire
Discovery of man.

And they thought that when the embers died away
That the flame of life had burnt and died
Didn't know the sparks that made the fire
Were made by rubbing stick and stone.

So they ploughed through forest and swamps of danger
And they fought the cannibal tribes and beasts
In the search to find another fire
To regain the power of light and heat.

Drawn by quest for fire
They searched across the land
Drawn by quest for fire
Discovery of man.

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14. Norrish type 2 on October 25, 2011 6:16 PM writes...

An important problem with the "Western" chemists is that most of them are only able to run Suzuki or amide bond reactions.

Furthermore, most of them don't even know how these reactions work.

They became lazy in the lab and intellectually lazy.

A shift towards China and India not only makes perfect business sense, it also makes scientific sense, unfortunately...

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15. Susurrus on October 25, 2011 6:18 PM writes...

@ #14: I've got a bridge for sale....

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16. anonymous on October 25, 2011 6:27 PM writes...

@14 - You Sir, are certifiably insane....

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17. KW's hairdresser on October 25, 2011 6:45 PM writes...

@14

You are nuts or in senior management. My experience is that most Chinese educated Ph.D.'s have all the skills and grasp of chemistry of a good US educated BS/MS chemist. The Chinese universities are not up to par with the US. Also, the average Chinese chemist simply lacks the creativity and knowledge of medicinal chemistry. Most are there to crank out compounds and be fed ideas from sympathetic managers.

Another tragic effect of hiring so many Chinese chemists is the complete lack of cultural integration into a company's ethos.

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18. Anon 2 on October 25, 2011 6:46 PM writes...

@14
You've got to be kidding, there's more expertise in complex molecule synthesis in any one large pharma chemistry group in the US or Europe than probably all the CROs in Shanghai. While I am the first to admit there are some very talented chemists in China & India, and many in Shanghai, if you roamed the halls of big pharma in the "west" it's hard to find someone who hasnt worked on a ridiculously complex natural product.

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19. Anon 2 on October 25, 2011 6:46 PM writes...

@14
You've got to be kidding, there's more expertise in complex molecule synthesis in any one large pharma chemistry group in the US or Europe than probably all the CROs in Shanghai. While I am the first to admit there are some very talented chemists in China & India, and many in Shanghai, if you roamed the halls of big pharma in the "west" it's hard to find someone who hasnt worked on a ridiculously complex natural product.

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20. Anon 2 on October 25, 2011 6:46 PM writes...

@14
You've got to be kidding, there's more expertise in complex molecule synthesis in any one large pharma chemistry group in the US or Europe than probably all the CROs in Shanghai. While I am the first to admit there are some very talented chemists in China & India, and many in Shanghai, if you roamed the halls of big pharma in the "west" it's hard to find someone who hasnt worked on a ridiculously complex natural product.

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21. Anonymous on October 25, 2011 6:56 PM writes...

@14 screw you and the stuxnet virus you rode in on!!!

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22. imatter on October 25, 2011 7:44 PM writes...

All these RD cut backs are seeing where the puck is and not where its going. The sad part is that history shows that real innovation not coming from where the manufacturing is at.

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23. pharmadude on October 25, 2011 7:47 PM writes...

I wish I knew what empolyment all the dismissed western chemists end up getting?

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24. Anonymous on October 25, 2011 7:56 PM writes...

Face the reality! Those talented Chinese chemists were treated as second class scientists when there worked here. They could never manage to get to leadership positions simply because they were not considered as having "leadership skills". What many people do not realize here is that these same people who lacked so called "leadership skills" are becoming great leaders in China. Those who have the "leadership skills" are killing the jobs here and sending them to China. What a perfect match!

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25. @14 on October 25, 2011 9:08 PM writes...

"Norrish type 2" = Troll extraordinaire

The McLafferty Rearrangement is way cooler anyway.

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26. r.pal on October 25, 2011 9:18 PM writes...

As one who does regular consulting in India I can say that the quality of Scientists is very poor.Most cannot write a simple mechanism and most have very poor people skills. It is more like a feudal system . I am sure the situation in China is also similar.
In 1972 the late Indian Prime Minister Mrs. Gandhi when asked about the state of Indian science said, " undo redo is all we do." What is true then is more true today.

Little wonder that after 60 years of Indian Independence not a single Nobel Laurate has go to an Indian based in India.

So it is hard for me to fathom what Novartis see there other than cutting costs but it will come at a heavy price.

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27. anonymous on October 25, 2011 9:24 PM writes...

@14 You can't be serious!!!

Everyone on this side of the phone conference knows that you outsource the easy stuff (Suzuki and amide bond libraries) and work on the harder chemistry internally. Otherwise nothing ever arrives for weeks and weeks and weeks.

BTW, in next weeks shipment, can you please keep the silica gel, filter paper and vacuum grease out of the product. Thanks.

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28. My 0.02 on October 25, 2011 9:25 PM writes...

Whether you like it or not, it is capitalism at its best. The fact of matter is productivity at big pharma as measured by new drugs approved, particularly those developed internally, has been dismal in the recent years. If you spend lots of money on something and there is nothing to show for it, would you try something new (and cheaper)? Certainly, some chemistry/biology jobs might never come back when outsourced. But new industries, jobs and opportunities would be created each and every day. I am sure that over 100 years ago, when all manual farming jobs were lost in mass due to introduction of machines. Farmers then were just as pissed as chemists today.

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29. Student on October 26, 2011 1:02 AM writes...

Derek, were your two posts today meant to compliment each other? Because they do, and summarize where the industry is headed fairly well. Outsource the R&D to China (since its a simple process that requires more working and less thinking), get something tangible, then let big pharma/VC play shell games with the drugs...I take that back, this isn't where we are headed, it is where we are now.

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30. Young Padawan on October 26, 2011 1:28 AM writes...

I heard from an inside voice that Roche has an interesting new business model. Apparently they employ research chemists in Basel whose only job it is to hand out work to 5-6 "donkeys" in India, collect the results and adapt their chemistry. This all goes either over the phone, mail or video. I guess, at the end the compound will be shipped over to Basel. VoilĂ ...

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31. sgcox on October 26, 2011 2:25 AM writes...

I think it was made absolutely clear by Novartis that no research will be outsourced to China/India. Please read the Derak' post for god sake !

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32. Quintus on October 26, 2011 4:37 AM writes...

@31, if you believe that, then sir you are naive

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33. Bruce Dickinson on October 26, 2011 5:33 AM writes...

I wondered how long it would take before someone spotted we were describing the fate of modern pharma research in our songs.

The number of the beast is in fact about Fred Hassan and "Bring your daughter to the slaughter" is a predictive ditty about the Merck HR equal opportunities policy for senior management.

Rock On !

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34. Anonymous on October 26, 2011 6:51 AM writes...

@24 Yes, because China is a place where people are used to Great Leaders.

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35. chemStar on October 26, 2011 8:51 AM writes...

Quintus, you are just talking about things you do not know (while pretending otherwise)
Not a single R&D job is outsourced to Chindia, actually headcount in US in increasing

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36. Quintus on October 26, 2011 10:15 AM writes...

Chemstar, sorry you are wrong, I know and I'm not pretending.

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37. @35 on October 26, 2011 1:35 PM writes...

chemStar, you can go eat d*ck...actually, if you land a job in China, you can eat endangered animal d*ck.

From the mouth of the beast (Novartis Media Release 1352116):

November 03, 2009 07:15 CET

Novartis announces USD 1 billion investment to build largest pharmaceutical R&D institute in China

* Novartis Institute of BioMedical Research in Shanghai, an integral part of the Novartis global R&D network worldwide, to rank third largest for Novartis worldwide

* Additional USD 250 million invested in advanced technical R&D and manufacturing facility opening in Changshu, furthering economic development of Jiangsu province and Suzhou city

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38. Anonymous on October 26, 2011 4:12 PM writes...

@ KW's hairdresser (#17) -

"My experience is that most Chinese educated Ph.D.'s have all the skills and grasp of chemistry of a good US educated BS/MS chemist. "

As a good US educated BS/MS medicinal chemist, I am rather insulted! I had to supervise two groups from China's two largest CROs in the past. I had to give them a written procedure for every single step, even to take off a BOC group. Need I say more?

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39. Nowhatis on October 26, 2011 5:54 PM writes...

R&D is gone at the NJ site. Basel development is nearly not touched, same for Cambridge discovery. Novartis is very good at laying off people quietly. It laid off more than 5000 employees in past one year!

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40. KW's hairdresser on October 26, 2011 6:58 PM writes...

@38

Point well taken! No slight intended on the US educated MS/BS folks out there.

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41. @Nowhatis on October 26, 2011 7:03 PM writes...

Isn't process chem R&D still in Hanover, NJ? Also, I thought that oncology retained clinical development in NJ...

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42. Water on October 27, 2011 12:19 PM writes...

Are you dreaming #41?

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43. Anonymous on October 27, 2011 4:41 PM writes...

@38. A written procedure no matter how easy for CROs is standard procedure and probably has more to do with holding the customer (i.e. you) liable than with lacking chemical skills at CRO.

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