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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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February 3, 2012

AstraZeneca in Waltham

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Posted by Derek

From several reports, here's what I have on AstraZeneca's plans in Waltham: they've told people there that cuts are coming. But they haven't gotten very specific on when, or who, or how many. All those questions (that is, all the questions there could be) are under review.

Pfizer has done this to their people before, as have other companies in the throes of layoffs, and it's the only way I know to actually push morale and productivity down even further in such a situation. You come to work for weeks, for months, not knowing if your, your lab, or your whole department is heading for the chopping block. All you're sure of is that someone is. And will your own stellar performance persuade upper management to keep you, when the time comes? Not likely, under these conditions - it'll more likely be the sort of thing where they draw lines through whole areas. Your fate, most people feel at these times, is not in your own hands. A less motivating environment couldn't be engineered on purpose.

But that's what AZ's management has chosen to do at their largest research site in North America. I hope that they enjoy the results. But then (and more on this later), these are the people who have chosen to spend billions buying back their own stock rather than put it into research in the first place. It's not like the score isn't already up there on the big screen for everyone to see.

Update: as mentioned in the comments, this does at least give everyone a warning bells, and a chance to explore other options, as they say. And that's true. AZ employees, though, have been seeing nasty cuts for a while now, and have been well aware that they're not in a stable environment. It's hard to make the decision to leave, but there have been plenty of chances to think about it in the last two or three years.

But I was actually arguing against the company's Waltham strategy from the viewpoint of upper management, on their terms. It's better for employees to have some warning, but I think it's better, for a company, to cut if you're going to cut, and get it over with. If you say that deep cuts are coming, you should do the actual deed as soon as you can. Then you tell the departments that are left, "OK, the storm has passed. Let's try to turn this thing around". But this current situation is the worst of both worlds. "All right, people, here come the big cuts: this site's closed, that site's closed. But your site, well, we don't really want to close it, but we still haven't had time to work out how much to shrink it. Yeah, this was supposed to be the big announcement, but it's just been really busy - you know how it is. We're going to get around to you. Pretty soon. And pretty deep. But we don't know which parts to lop off, not just yet. Back to work, everyone!"

Comments (61) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Matt on February 3, 2012 8:00 AM writes...

Would you prefer that they keep their employees in the dark until the day of the cuts, depriving them of an opportunity to find a job elsewhere without having to go through the indignity and humiliation of being laid off?

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2. Industry Guy on February 3, 2012 8:37 AM writes...

Matt-
They tell employees so that they do go look for a job elsewhere and dont have to pay them severence when the time comes.

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3. You're Pfizered on February 3, 2012 8:59 AM writes...

Would you prefer that they keep their employees in the dark until the day of the cuts, depriving them of an opportunity to find a job elsewhere without having to go through the indignity and humiliation of being laid off?

What jobs elsewhere?

It's like being able to find out the exact day your are going to die. If you could, would you?

There is no indignity or humiliation getting laid off, not anymore. It's business, not personal. Don't take it personally. Take your severance and move on. What used to be a stigma is simply the price of working in an industry that's shedding jobs by the barge-full. Besides, walking away with a severance package gives you a bit of time to plot your next move. Couple this with collecting unemployment and you can can weather the poor job market for a bit longer, or opt to go in another direction.

Since this industry is shedding jobs all the time, if you aren't always looking for that next job, you're in denial. Best case scenario is that you have something in hand when they let you go...

The outfit I work for doesn't make these broad announcements, you come into work one Wed or Thurs morning and it begins. I had advance warning that last year's layoffs were coming and I didn't sleep at all that night. I preferred not knowing, like when I was laid off several years ago. The shock wears off and you move forward.

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4. CanChem on February 3, 2012 9:05 AM writes...

@2 - Yep, one of my best friends was at Pfizer in MA, and rather than wait for the openly announced axe to fall he jumped ship and joined another company, thinking at the time he was so smart to get a job before the market got flooded with his coworkers. Except when the final cuts came it worked out that he lost 9 months severance, a fact he brought up on a near-weekly basis.
His experience was that Management actively encouraged people to jump, thereby saving cash, but as Derek previously expounded, at incredible cost to dedication of all who remained.

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5. lynn on February 3, 2012 9:24 AM writes...

I don't know how people live with the long term dread. And of course there are many refugees [from other companies' slashings] at AZ-Waltham. Good luck to all...

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6. DannoH on February 3, 2012 9:25 AM writes...

I agree with #3 - I walked into work on a Friday morning and HR was directing everyone into the breakroom (lucky it was a small facility). The Plant Manager gave a speech, and HR immediately started processing people out the door. It was much better to be surprised and have it over with at the same time, rather than agonize over the anticipation of what is coming.

Completely agree with always keeping your eyes open for the next job. If you are not interviewing every three months just to keep your skills sharp and name circulating, you are going to be behind the curve when the time comes to hit the bricks.

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7. DJ DrZ on February 3, 2012 9:34 AM writes...

I have been laid off twice (no humiliation in it, #1 Matt, it is just business). The first time was swift and "easy" for lack of a better word. We weren't expecting our dept to get axed, it did without warning. The second time, I had been worried about my job since rejoining the department I had left (in one of many lets move people around moves that mgt does in order to justify their existence). Then it happened, the day I got back from international travel. I prefer option #1 over #2 any day of the week, and twice on Sunday.

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8. Michael Corleone on February 3, 2012 9:59 AM writes...

Now, look, Carlo, it's been a very busy time for the family. We know what you did with the Barzinis, and we know you set up Sonny. Did you think you could fool a Corleone?

But as I said, it's been busy around here, so we're gonna take a few days, we're going to look around, do some analysis, do some Six Sigma regressions, and then we'll figure out whether or not we're going to terminate your relationship with the family and whether or not we'll decide to take matters further. Okay?

Hang around the mall for a few days, have a drink, feel free to go to the track. We'll talk soon.

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9. luysii on February 3, 2012 10:07 AM writes...

If new effective drugs were being discovered all the time there would be no layoffs. The reason they are not being discovered, is that drugs are agents trying to alter a system that is only dimly understood (the cell and its interactions with other cells).

One analogy is the way people tried to deal with infection before Pasteur. They were able to classify them fairly well without knowing the causes. Even advances in hygiene helped (Google the Broad Street Pump). Some treatments although barbaric (such as Mercury for syphilis) were somewhat effective -- this led to the expression One night with Venus, 6 months with Mercury.

For 20 or so examples of how little we understand the system see https://luysii.wordpress.com/category/aargh-big-pharma-sheds-chemists-why/

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10. anonymous on February 3, 2012 10:09 AM writes...

Folks,

Hate to tell you this, but unless you are

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11. johnnyboy on February 3, 2012 10:37 AM writes...

Agree with all the responders to #1 Matt. I was with Pfizer at the time of the Pharmacia acquisition and subsequent re-org. Although I knew my division was safe, my girlfriend worked in another division that was a probable target; it might stay, it might move to another site, it might be sold - no one would tell them. The wait for the announcement went on for months. Work in her division ground to a halt, as all projects were essentially put on hold. Morale was below zero; the uncertainty and complete powerlessness she felt made her cry practically everyday, and made me extremely angry at the company. Different rumors about their fate were appearing every week. Mid level management kept telling them they didn't know anything, but when after almost a year it was finally announced that her entire division was being moved across the country, turns out many mid-level managers had already bought houses at the new site. The whole experience left us disgusted about the company, and really about a system that treats its workers like interchangeable pee-ons. A sudden announcement would have been immensely preferable.

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12. drug_hunter on February 3, 2012 10:41 AM writes...

My advice to the AZ folks would be: use this time to write papers, build networks, learn some new skills, go to conferences, and get caught up on the literature. In short, treat this as a golden opportunity to refresh your own career.

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13. ano2 on February 3, 2012 10:50 AM writes...

It's just like manyother company's do it. Particularly as they all consult outside "avisory experts" who just recycle their wares.

In geneal, upper management anagement first decides they need to save money in R&D spends, pick a target for valuation saving, and then have to figure out how to match in organization changes. Enter the game of friendships, politics, biases, concepts relate savings by outsouring, consolidation of responsibilities to cut positions, "top heavy" (eg high wage earners) staffing, etc, "preferred" areas for future internal R&D spends, etc, and magically comes the "new organization".

Pfizer, GSK, Merck, AZ....all similar schemes within small variation.

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14. OldLabRat on February 3, 2012 11:37 AM writes...

Johnnyboy is right on target as Mr. Mackay is using the exact same language and processes at AZ he did at Pfizer.

In Groton, many folks followed the advice of drug_hunter in #12 and were less miserable. Several also identified a new job and were able to set the start date post-severance. I'm not sure that's possible in the current job market.

Having been through this, both fast and slow; fast is preferable by far. It's still a shock, even if you know it's coming, but at least one can start getting past it sooner.

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15. anchor on February 3, 2012 11:44 AM writes...

Let me also pitch in my few cents worth- There are no perfect settings in these job climate especially in pharmaceutical industries. If you are Ph.D (with some years behind you) then the wait is worth and then you walk off with separation package and then some. I am informed that many at Merck @ Rahway site opted for that. Understand that Ph.D (especially if you are over 45y) jobs are a rare commodity, unless you are freshly minted. Hence I would wait. Similar advice also for MS and BS graduates (with some experience) except that you stand better chance of landing your next job.

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16. luysii on February 3, 2012 12:09 PM writes...

Take if from a retired doc, who's had to give people bad news many times -- there is simply no good way to do it. As is the case here, the anger is directed at the way the news was given (and the giver) rather than the news itself (which can't be changed in most cases).

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17. CR on February 3, 2012 1:02 PM writes...

First, let's please stop calling these "lay-offs". This isn't what is happening, people are being fired. My father worked for Chrysler in the 70's and he was laid off - to be called back based on seniority at a later data. He was, in fact, called back a couple months later. I went through this several years ago when the company I was working for decided to reduce head count - I was not "laid off" I was, in fact, fired.

Second, the companies don't care about morale or how this is going to impact productivity. If they did, they would not be doing what they are doing. What the upper management really wants to do, is drive people away so they don't have to pay severance. It's clear as day. As Derek states: "A less motivating environment couldn't be engineered on purpose." You don't think this is on purpose? Of course it is.

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18. Nick K on February 3, 2012 1:38 PM writes...

@17; "Never ascribe to malice what can be explained by incompetence" (Robert Heinlein). While it's tempting to accuse senior management of Macchiavellian tactics, more likely they themselves are floundering around in the dark. Remember, they themselves are under huge pressure from institutional shareholders unwilling to wait. The big difference from the rest of the workforce is the size of their salaries and severance packages. That's the real scandal.

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19. Lester Freamon on February 3, 2012 1:51 PM writes...

Ah, AZ Waltham, one of the biggest anti-infective discovery centers in America.
It's cool, we don't need any more antibiotics, we'll be fine, the bacteria will just probably become more sensitive to the old drugs and everything will work itself out.

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20. SwedenCalling on February 3, 2012 2:02 PM writes...

Same shit is happening at the Mölndal site. Up to 200 FTEs (not people) will be made redundant. I will keep low and follow drug hunters advise...it might even benefit AZ if I come up with something bright. My 2p back is do not let the morons get to you. Easier said than done. / Greetings from a drug hunter considering alternative careers

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21. Pig Farmer on February 3, 2012 2:16 PM writes...

@CR. Absolutely spot on, I'm sad to say. Same thing happened to me at my former work place.It used to be called "constructive dismissal". After humiliating me for 6 months, my supervisor made a half-hearted attempt to get me to resign, thus saving the company on severance pay and health insurance. I refused, and was subsequently fired.
The work place has become a real jungle.

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22. Winston Churchill on February 3, 2012 2:26 PM writes...

Many studies have shown that the anticipation of pain is much worse than pain itself. The sudden announcement that you are being fired is far preferable to months of agonizing, lost morale and productivity. Nick K is correct - pharma firing practices are not motivated by malice, it's simply emblematic of the slow decision making that cripples big pharma.

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23. SeenThisBefore on February 3, 2012 2:34 PM writes...

Three points stick out at me.

1. We've seen this movie before. Mackay presided over the destruction of Pfizer's R&D and now he is given the keys to AZ's R&D. The guy Mackay replaced - Jan Lundberg - ran the ship aground at AZ and picked up where he left off at Lilly. Don't these companies ever learn? No wonder they are a breeding ground for management consultants. Which leads me to No. 2...

2. AZ boasts that 60% of its senior leadership has come from outside pharma. Somehow the prospect of Joe Blow who sold widgets firing up a "branding plan" for a Phase 1 candidate is nauseous. It's clear from the literature that the halycon days were over when the marketing clowns took over - now we have CIG; fines; lawsuits; investigations; cooked articles; off-label promotion. 'Nuff said there.

3. The stcok buyback program is designed to do one thing and one thing only - reduce the number of outstanding shares and float the stock price to ward off the corporate raiders. Or more cynically, to jack up the stock price so that the upper crust can get even more when the golden parachutes are handed out in the wake of the buyout. And that is where this is headed - the AZ pipeline has been in steady and consistent decline since 2002 or so. Nothing's left to fill the gaps. The endgame is written - it's just a matter of time.

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24. Anonymous on February 3, 2012 2:36 PM writes...

If it is any comfort, by the third time you have been through the dread of potential severance, behavior analysis, slating and selection you get used to it. You lose any notion of morale, enthusiasm, loyalty or commitment in the organization and become "change agile"

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25. Jim on February 3, 2012 2:38 PM writes...

It's beyond disheartening to watch this continue to happen.

I'll say this about ways of laying people off (or firing them, if you prefer) - there is NO good way to do it. Simply pick your poison. I've heard countless different methods employed, none of which sound good. On the other hand, everyone clearly thinks one is much worse than the others, and nobody agrees on which one that is.

But if you think they try and get people to resign to save on severance, you're simply wrong. Ask anyone in finance - severance does not count against EBITDA, which is the new (fake) number that represents the company's financial health and is a huge driver on Wall Street. It affects cash, but that's really not an issue.

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26. Ginsberg on February 3, 2012 3:02 PM writes...

I think luysii is onto something, "If new effective drugs were being discovered all the time there would be no layoffs. The reason they are not being discovered, is that drugs are agents trying to alter a system that is only dimly understood (the cell and its interactions with other cells)."

We have the hardest job in the world. Cure cancer? Using what? When? Okay boss.

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27. bbooooooya on February 3, 2012 3:10 PM writes...

'First, let's please stop calling these "lay-offs"'

Yes, far too harsh a word. 'Right-sizing' is a much much kinder, gentler way to described getting canned.

I would love to find the A$$hole from BCG or Mckinsey who coined that phrase.

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28. Publius The Lesser on February 3, 2012 4:44 PM writes...

Understand that Ph.D (especially if you are over 45y) jobs are a rare commodity, unless you are freshly minted. Hence I would wait. Similar advice also for MS and BS graduates (with some experience) except that you stand better chance of landing your next job.

I suppose the question is: why do companies prefer newly-minted PhDs over older PhDs with industry experience?

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29. fredo on February 3, 2012 4:52 PM writes...

I agree with #3 - being told you might be laid off doesn't give you time to prepare, because you don't know what to prepare for. It just gives you time to be stressed and unhappy.

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30. CR on February 3, 2012 5:04 PM writes...

@28, Publius the Lesser:
"I suppose the question is: why do companies prefer newly-minted PhDs over older PhDs with industry experience?"

$$$$$$ for starters.

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31. Publius The Lesser on February 3, 2012 5:17 PM writes...

@30, CR

@28, Publius the Lesser:
"I suppose the question is: why do companies prefer newly-minted PhDs over older PhDs with industry experience?"
$$$$$$ for starters.

Which is another way of saying that part of an older PhD's value is their institutional experience as opposed to their industry experience. If salary is the issue, perhaps it needs to become culturally expected and accepted for older workers to ask for a lower salary to reflect that part of their intellectual capital that is no longer applicable to their new job?

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32. Susurrus on February 3, 2012 5:28 PM writes...

I've been thinking and I've decided that big pharma is living the plot of the movie, The Highlander. Cutting off each other's heads to recieve "The Quickening" (although, it seems, sometimes they cut off their own head - in which case I'm not sure who gets the prize. Not me, that's for sure). THERE CAN BE ONLY ONE! (but which one will it be?)

(Apologies in advance. I'm just a nerd having a little fun)

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33. Another Kevin on February 3, 2012 5:30 PM writes...

And they tell employees so that the best and brightest among them - and hence the most capable of finding places elsewhere - will leave. Since those employees are typically the most expensive ones, that's a tremendous cost saving, and since all employees are equivalent and interchangeable, those are the ones it's most expensive to get rid of.

See also, "lean and mean": http://dustyvolumes.com/archives/463

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34. anchor on February 3, 2012 5:46 PM writes...

#28- What I wrote, I have seen that happen and I myself (45+ y) is paying that price. I am talking of only those who were a bench chemist. As to why the fresh PhD's are preferred, may be they bring fresh ideas and vigor. These days, speed is the name of the game in drug discovery and not experience or intellect. I also agree with #30-I do not know who said it (H.L. Mencken?)but when they tell us it is not about the money, it is about the money.

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35. GreedyCynicalSelfInterested on February 3, 2012 7:35 PM writes...

Aren't you glad that you got that Ph.D.?

There's a graduate student born every minute!

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36. anonymous on February 3, 2012 9:21 PM writes...

Theres not a morning I wake up that I don't think about the tremendous mistake I made in getting a PhD. It absolutely baffles me that students are burning the best years of their life to be unemployable.

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37. Anonymous on February 3, 2012 9:58 PM writes...

@17
What you describe is what went on and continues at the Roche site in Nutley, NJ, especially in chemistry. Individuals are leaving and not being replaced. A healthy organization with a future would be replacing those who move on. This isn't happening so here's an example of "engineered failure and demotivation...and if I may add.... demoralization". Passing around a rubber chicken to punish and bully employees isn't going anywhere. If I were management over there, I'd slow down a bit on the bullying....after all, we're all expendable.

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38. Andy on February 4, 2012 6:10 AM writes...

Isn't this whole industry beset by problems because of the disparity between time served on the board/in senior management and the time taken to take a drug from conception to market?
When times were good, choose where to spend, when times got tough, it became necessary to make cuts because increasing revenue is not an option.
Whilst this doesn't justify the appalling short-termism, it does explain it; those at the top are powerless to increase new drugs for immediate benefit, so they're left with one option.

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39. Ed on February 4, 2012 10:19 AM writes...

The fact that they are undertaking share buy-backs at the same time as shedding staff is perfectly understandable - the two are not really related all that closely.

It is simply the case that there are insufficient internal projects with positive NPV, or that have been estimated to fail to pass an IRR hurdle. Some borderline projects may well become viable if done outside of AZ due to lower costs, some may become internally viable with a lower cost of capital, or when done in lower cost labs. All else being equal, share buy-backs will reduce the cost of capital for the company as a whole, lowering the level of the hurdle.

In order to maintain positive returns, something has to give. Unsurprisingly, that "something" is the high salaries of managers/scientists in R&D areas that have been evaluated as being in the riskiest (lowest risk adjusted NPV areas), especially those in EU/US where costs are highest.

Google "Deloitte Is R%D earning its investment?" and read the report - then you might understand why these projects are being externalized or eliminated.

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40. Cellbio on February 4, 2012 1:02 PM writes...

Thanks for the heads-up to the Deloitte piece Ed. I read it, it is good, and I too recommend others read it.

Though I think it worth reading, it is not anything more than all the prior analyses from financial types trying to work magic to make drug discovery more efficient. Note they keep a clear focus on IRR for development of late stage assets. It is also a model, with assumptions and uncertainties, that lead the authors to the conclusion that IRR can be improved by a 7% increase in Ph3 and submission success rates, 11% reduction in R&D, a 13% growth in product sales and a 28% reduction in R&D cycle times. Seems like they could have also suggested only working on discovery projects that will yield marketed projects, only making the compound that is the final drug, and deploying R&D staff in the field to chase Leprechauns to their pot of gold.

Seriously, though unsurprising, why do we accept that salaries paid to researchers are "cost" and expendable to the operation, but never challenge the cost of high salaries to the business types that turn innovation cultues into financial management enterprises, nor do we pick our heads up and ask about sustainability.

Exactly how do these companies improve Ph3 rates and cycle times and maintain viable revenue streams? Perhaps the answer is "right-sized" R&D, perhaps the new ecosystem that fuels innovation in small companies. I do believe these could be the right answers, and with that belief, feel the Deliotte analysis and others like it are not worth much, as the most sensitive "lever", to borrow their phrase, for future of IRR driven models is this external ecosystem of innovation, such as, its cost for Pharma, and its ability to achieve the stated goals for improvement like cycle time and success rate (but not the Leprechaun part).

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41. DrSnowboard on February 4, 2012 2:47 PM writes...

@cellbio good reply, I agree with your points

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42. Ed on February 5, 2012 4:52 AM writes...

Cellbio,
You are of course correct that these economic models are layered with assumptions and uncertainties; of particular note is the extreme sensitivity of such models to the discount rate (itself at best an educated guess) which over the 15-20 years of the discovery-development-sales projection makes them very uncertain. I suspect that they are used in the same way that a drunk uses a lamp-post – more for support than for illumination. I’d suggest the figures you quoted (excepting the leprechauns part :-)) are indicative of a proposed direction, and are not absolutes. Different companies will have different analyses and will ultimately take different directions, although broad themes have obviously become common. Moving to contain costs when supposed First World countries such as Greece can’t pay the drugs bill is hardly surprising, is it?

Innovation cultures may well have turned into financial management enterprises (I have no direct experience of this) – but financial management lies at the heart of all business decision making and I personally don’t see the two (innovation culture, financial management culture) as being mutually exclusive. Maybe they are where you work – but I’d suggest that is more to do with the scientific managers that you have than the Suits on the 10th Floor.

In my experience, most if not all pharma/biotech scientific line managers have been promoted on scientific achievement rather than their adeptness at personnel or innovation management. How many of your med chem line managers or project leaders read HBR, or circulate interesting articles from it? How many have actually studied management in any way? Do they know how to build a good team? What behaviours should they show/not show to encourage innovation? How do they motivate the different personalities in their team? How does one effectively set-up and cultivate externalized cross-functional collaboration?

I suspect that most scientific line managers are somehow supposed to have magically absorbed the knowledge to answer these questions rather than from study, learning or reflecting on action.

In my opinion, a lot more of the analysis of the “failings” of medicinal chemistry R&D to deliver should look inwards, rather than outwards.

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43. Ellen Clark, Clark Executive Search on February 5, 2012 8:41 AM writes...

#6, I agree. As a recruiter who has placed scientists and doctors in the industry for close to 20 years now, I know a bit about these matters. Over the years I have gotten countless calls from desperate workers looking for a new job. One point I will highlight: When there is a chance for a new job, take it. Don't wait for severance. Don't say you can't relocate. I have tried to recruit people at the time of announcements of job cuts. Some people said they were not interested. They wanted to stay for the severance. Then a while later they called me and they told me they couldn't find a job. It was too late. I had called with a job earlier, but when they called back, I didn't have any positions fro them. Another common response to my calls was that they wanted to wait for a job in the local area. Again months later they would call me desperate for a job- anywhere! So my advise is to look for a new job as soon as there is a hint of job cuts and take a job wherever it is even if it requires relocating. Believe me, the jobs just aren't out there like they used to be.I am actually thinking I might have to try to get some CRO clients. What a crazy world.

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44. Johnson on February 5, 2012 9:11 AM writes...

@28

"Understand that Ph.D (especially if you are over 45y) jobs are a rare commodity, unless you are freshly minted. Hence I would wait. Similar advice also for MS and BS graduates (with some experience) except that you stand better chance of landing your next job."

Pretty messed up. After a PhD and postdoc, most scientists don't get started until the age of 30. How do you suppose to make it until retirement?

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45. SittinghereinLimbo on February 5, 2012 10:37 AM writes...

#42 Ed said: "In my experience, most if not all pharma/biotech scientific line managers have been promoted on scientific achievement rather than their adeptness at personnel or innovation management. How many of your med chem line managers or project leaders read HBR, or circulate interesting articles from it?"

Your experience is thus irrelevant to the discussion. In my 25 years in drug discovery (including pioneering the research that led to a marketed drug and six patents) >90% of the managers I've encountered have gotten there because of their Machiavellian talents, and none ever contributed more to Science than their weak Ph.D. dissertations or their one required publication from a subspecialty residency.
However, virtually all of them circulated pompous, ignorant drivel from the HBR on a regular basis.

Given their "impact" on those oprganizations, it appears this was mostly to show each other that they were "working" to stay on the cutting edge of something. Nothing difficult like cancer biology or novel treatment modalities, but something "novel," to be sure.

Undoubtedly, 100% of them now use the term "externalized" every day.

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46. Sahra on February 5, 2012 1:42 PM writes...

I think it is highly likely that PhDs granted today (after the mandatory 2-5 years of postdocs), will only earn wages from their bench jobs to compensate them for the money they would have made doing something else with their time.

That is, those who are employed at all. A good 50% of all PhD chemists today will never work as chemists.

Hence your industry job will pay for your indentured education time, nothing more. After that its on to something else. Chemists older than 40 just don't have the pep of their younger colleagues.

I think it wise then that many graduate student instructors and postdocs are unionizing. You have to be able to extract as much money from the 'lost years' as possible to pay for your knapsack, bed-roll and hobo-garb.

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47. Jonadab on February 5, 2012 6:24 PM writes...

Maybe they know they're going to have to close the whole site, but they're trying to leave the employees a small amount of hope that some of them might potentially still have jobs, so they'll keep working at least a little until the whole thing is fully finalized. By admitting that there are going to be some cuts, they take the focus off the more dire possibility that the whole ship might go down.

Yeah, I know, I'm such an optimist.

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48. Big Orange Pork Chop on February 5, 2012 7:10 PM writes...

The reason that management plays these games is that they want you to stay until they tell you to leave. Having been through the Glaxo/BW and GSK fun houses, by the time that management finally figured out who was going to be cut, a considerable number of staff who they wanted to stay, had already found new jobs and taken off. And in between the mergers, there was wave after wave of reorganizations - people just get tired of continuously being jerked around - with no clear goal in sight. Several people I know, who are within 5-6 years of retirement, are just waiting for the numbers to tip in the right direction, and they will be out the door.

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49. Cellbio on February 5, 2012 11:36 PM writes...

Hey Ed,

Enjoy the dialog.

I agree that financial management lies at the heart of business decisions. It business after all. However, the risk taking associated with non-revenue generating small companies is accompanied, in good examples, by a very different mode of financial management than that associated with large companies. Just think about how people travel, the nature of an office, the lobby with or without back-lit signs. So, while certainly not de facto mutually exclusive, in practice, innovation and financial management rarely come together these days in cash flowing businesses.

I would add that i do not think this was always the case. And since financial management is not new, though certain approaches perhaps have new wrinkles, I come to the conclusion that our current business leaders are trained to return short term profits, and will do so at th expense of long term viability. I suppose for tech or social media based operations a short term focus is wise, but really bad for pharma in my opinion.

I also agree that the best first place to look in analyzing failure is within oneself. This leads me to be dedicated to improving the business savvy and management skill of PhDs. I mentor at 2 Universities and with several entrepreneurs. I do so because I share your belief that too few scientists develop leadership and management skills, and that without them, the void is filled with the types you describe, or worse yet, non-scientists who mis-apply financial management tools to innovation.

BTW, I do read HBR regularly, and find it to have a useful thing or two...each year. The problem I and many scientists have that have absorbed some leadership skill, is that we are rooted in our scientific training and approach these readings with skepticism, and are willing to call out logical failings or lack of clarity in language when we see it, which is exceedingly common in HBR and related readings. For me, the frustrating part is the inability of the MBA types to join in nuanced discussion that might take ideas, general guidance etc and extract the good that fits for the particular organization or situation. It becomes a bit like the bible, you have to believe or not, skeptics are "not team players" or "just don't get it".

One of my favorites was being told that leaders can't just see the big picture, we have to be seen seeing the big picture. The image they used was of a person with entourage standing on a balcony above an adoring crowd, the catch phrase "Get on the balcony".

This image of latin American Banana Republic dictator presaged well the fate of our industry as leaders prospered (while pitching any one of a number of change initiatives) while the masses gave up much, including livelihood. Contrast this with the staid, financially solid leadership of the prior generation, and I wonder if these men that lead Merck, or 3M, or whatever pre-Pfizer company would have found HBR to have been anything more than fluff from University (stuffed shirt) business thinkers.

Do you think the business leaders are looking within?

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50. johnnyboy on February 6, 2012 12:26 AM writes...

@ Ed - "I personally don’t see the two (innovation culture, financial management culture) as being mutually exclusive."

You may know something about management, but I posit that you don't know much about pharmaceutical research. "Financial management" as it's been practiced in pharma in the last few years has not been about tweaking company structures to improve the quality (or cut down on) mid-level line managers, or even about training managers to "effectively set-up and cultivate externalized cross-functional collaboration", whatever the hell that means. "Financial management" in big pharma has basically been a scorched earth policy of shuttering entire sites, or entire therapeutic areas, and praying that moving activities offshore will somehow make everything better.
It's short-term thinking that helps the balance sheet for the current quarter, but results in the opposite of fostering a productive research culture, by disgusting and demoralizing the scientists who are the reason for the industry's existence, and not mere interchangeable FTEs.

No wonder the kids of today all want to go into finance rather than science. They've understood from the current climate that being middlemen managing other people's money is more valued today than actually trying to produce something real (ie. something that's not percentage fees). They might get a bit of a surprise in 30 years though, when whatever's left to "manage financially" has dwindled to a trickle.

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51. Anonymous on February 6, 2012 12:45 AM writes...

Damn, who knew that the answers to all of pharma's problems could be found in HBR? Why for just $129/year, you can find the keys to success! Call now and we'll include for no extra charge your own personal Six-Sigma secret decoder ring. Act now before time runs out.

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52. Anonymous on February 6, 2012 12:49 AM writes...

@ED....BCG or McKinsey?

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53. AH on February 6, 2012 8:22 AM writes...

In Sep 2009 Lilly announced it would cut 5,500 jobs in the following 24 months - roughly 12% of it's workforce. No information given as to where the cuts would occur, how, or when.

Like many others, I got the distinct feeling I was on a sinking ship. A year after that announcement I relocated the family and took a job at a CMO far, far away from Indianapolis.

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54. RD on February 6, 2012 8:22 AM writes...

Ed:"How many have actually studied management in any way? Do they know how to build a good team? What behaviours should they show/not show to encourage innovation?"

See, here's the problem. There's an assumption that studying management is somehow an asset. I would contend that a good manager doesn't need to study management and a manager having studied management is no guarantee of good management. Couple that with the nature of our work. In the lab, problem solving skills are key, not whether the process is followed. Finally, behaviors that encourage innovation? WTF does that mean when we are talking about cells? Innovation sometimes requires many iterations of an experiment, varying parameters, studying the entrails and either coming to a conclusion or proposing a new set of experiments to answer new questions. Managers who study management are looking at the costs of the individual widget or experiment. Innovation could happen with an out of the box insight suddenly or it might only come after years of arduous work. Costs containment and other optimizations may not apply and in certain cases, should not be attempted. IMHO, the high cost of discovery is not caused by the research, it's caused by the constant workarounds we have to go through. What could be as straightforward as running a sample down the hall to the next guy for analysis is now a bureaucratic nightmare. Instead of paying for the modestly paid chemist, we're paying for a phalanx of higher cost managers who study management.

One thing that would definitely speed up the innovation process would be to have more people doing stuff. When activities and experiments have to be rationed between project teams because the budget won't support these activities, the innovation process gets slowed down and becomes less linear. Feedback isn't optimal. Plus, there is all the time wasted setting up outside collaborations out of necessity.

Management gets in the way of innovation, Ed. Studying management is not substitute for actually doing the work and to do the work, you need people, precisely the thing pharma is shedding. I take that back. I am seeing more of the management staying and the hands on innovators laid off. How does that make any sense at all?

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55. Ed on February 6, 2012 2:45 PM writes...

Sorry to disappoint #52, but I am actually a bench med chemist at a CRO. [although a McKinsey sized salary would be nice.]

And RD #54, lets just agree to disagree.

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56. MIMD on February 7, 2012 10:01 AM writes...

A less motivating environment couldn't be engineered on purpose.

Indeed.

Quite simply, the true perversity that can come forth from corporate morons is spectacular.

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57. MIMD on February 7, 2012 10:13 AM writes...

#28

I suppose the question is: why do companies prefer newly-minted PhDs over older PhDs with industry experience?

See "Dunning Kruger effect" in Wikipedia.

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58. Anon on February 7, 2012 10:22 AM writes...

#42

How did Bill Gates get where he is, since he never did all the things you mention?

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59. Ed on February 7, 2012 4:42 PM writes...

Maybe because he employs lots of people that did?

E.g Steve Balmer, current CEO went to business school before joining Microsoft in 1980.

http://www.microsoft.com/presspass/exec/steve/?tab=biography

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60. Anonymous on February 17, 2012 5:11 PM writes...

@39
I worked in Roche’s Nutley Dis. Chemistry for over twenty years and what they have done there is truly sad. The lack of respect and consideration shown to employees is sickening. The attitude of the incompetent management is that they can treat people as badly as they want because of the high unemployment. I honestly do not understand the new culture which appears to celebrate incompetence.
I have found that it is much easier to find a job if you already have one, many companies will not even look at your resume if you are unemployed. I have also found many companies who consider being laid-off the same as being fired and they don’t even want the particulars of the situation. If you think that your job is in jeopardy, start looking.
Good Luck.

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61. Anonymous on January 25, 2013 11:24 PM writes...

How about shutting the whole place down
until you stop using Beagles for product testing,
I have no sympathy for your plight

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