Where The Jobs Aren’t: Research & Development
4 CommentsBy Ed Silverman // April 8th, 2008 // 12:13 pm
The other day, we ran a laundry list of the number of jobs cut by drugmakers, big and small, since early 2007. But the new annual report issued by PhRMA provides some interesting detail. Although the trade group regularly touts the research and development effort, the investment is shrinking. The total US employment by the group’s members in R&D fell by 3.9 percent in 2006, the last year for which data was available, to 79,856.
As The RPM Report notes, this drop doesn’t include the Ann Arbor, Michigan, facility closed last year by Pfizer. More cuts are expected - Wyeth is getting ready to slash R&D jobs later this month, according to sources. A spokesman for the drugmaker, which is cutting 1,200 sales jobs as part of an effort to trim its 50,000 global workforce, writes us to say that “we have said previously that our immediate objective is achieving a 4 percent to 6 percent reduction by the middle of the year and we’re on track to do so.” Up to 10 percent in cuts could occur over three years.
Going back to the larger industry picture, R&D employment was less in 2006 less than in 2004, RPM notes, adding that the headcount is found in Table 10, which is near the very end of the 62-page report. Meanwhile, industry spending on R&D hit an estimated $44.5 billion, a “modest” 2.5 percent increase. In the US, the figure was $35.4 billion, a 2.7 percent rise. In both cases, the rate of growth has slowed substantially. In 2006, US spending rose 11.3 percent compared with the previous year. (See Table 1 in the appendix).
Two of the hardest hit areas of R&D work have been the Approval” and Post-marketing categories. In 2006, more than 1,000 Phase IV positions were cut and more than 800 from the approval groups, RPM points out, adding that both areas had also been cut sharply in 2005: 674 places removed from approval work and 1,935 places dropped from post-marketing research.
Hat tip to the RPM Report
Nathan
I assume that you are talking about DOMESTIC research employment? Headcount in my corner of the big-pharma world is going up and up — but through subsidiaries in India. US headcount is going down and down.
ol cranky
In the US, more companies are using contractors and/or CROs which gives them a nice tax deduction as a research related cost
Phed-Up
This is the tip of the iceberg. Look for GSK to layoff ~40% of R&D before year’s end.
Gandalf
Subject: FW: Pfizer in the News
PFIZER TO CUT WORKFORCE 120 PERCENT
NEW YORK, N.Y. (AP.com) - Pfizer will reduce its workforce by an
unprecedented 120 percent by the end of 2008, believed to be the first
time a major corporation has laid off more employees than it actually
has.
Pfizer stock soared more than 12 points on the news.
The reduction decision, announced Wednesday, came after a year-long
internal review of cost-cutting procedures.The initial report concluded
the company would save $1.2 billion by eliminating 20 percent of its
108,000 employees.
From there, said a spokesperson, “it didn’t take a genius to figure out
that if we cut 40 percent of our workforce, we’d save $2.4 billion, and
if we cut 100 percent of our workforce, we’d save $6 billion. But then
we thought, why stop there? Let’s cut another 20 percent and save $7
billion.
“We believe in increasing shareholder value, and we believe that by
decreasing expenditures, we enhance our competitive cost position and
our bottom line,” he added.
Pfizer plans to achieve the 100 percent internal reduction through
layoffs, attrition and early retirement packages. To achieve the 20
percent in external reductions, the company plans to involuntarily
downsize 22,000 non-Pfizer employees who presently work for other
companies.
“We pretty much picked them out of a hat,”.
Among firms Pfizer has picked as “External Reduction Targets,” or ERTs,
are Quaker Oats, AMR Corporation, parent of American Airlines, Lockheed,
Boeing, and Charles Schwab & Co. Pfizer’s plan presents a “win-win” for
the company and ERTs, said Chris, as any savings by ERTs would be passed
on to Pfizer, while the ERTs themselves would benefit by the increase in
stock price that usually accompanies personnel cutback announcements.
“We’re also hoping that since, over the years, we’ve been really helpful
to a lot of companies, they’ll do this for us kind of as a favor,”.
Legally, pink slips sent out by Pfizer would have no standing at ERTs
unless those companies agreed. While executives at ERTs declined to
comment, employees at those companies said they were not inclined to
cooperate.
“This is ridiculous. I don’t work for Pfizer. They can’t fire me,” said
Kaili Blackburn, a flight attendant with American Airlines.
Reactions like that, replied the Pfizer spokesperson “are not very
sporting.”
Inspiration for Pfizer’s plan came from previous cutback initiatives,
said company officials. In January of 1998, for instance, the company
announced it would trim 18,000 jobs over two years. However, just a year
later, Pfizer said it had already reached its quota. “We were quite
surprised at the number of employees willing to leave Pfizer in such a
hurry, and we decided to build on that,”.
Analysts credited the short-term vision, noting that the announcement
had the desired effect of immediately increasing Pfizer’s share value.
However, the long-term ramifications could be detrimental, said Bear
Stearns analyst Beldon McInty.
“It’s a little early to tell, but by eliminating all its employees,
Pfizer may jeopardize its market position and could, at least
theoretically, cease to exist,” said McInty.
The spokesperson, however, urged patience: “To my knowledge, this hasn’t
been done before, so let’s just wait and see what happens.”