Pharma Cuts Empty The Nation’s Medicine Chest
2 CommentsBy Ed Silverman // May 12th, 2010 // 7:11 am
For years, the Garden State has bragged about being the nation’s medicine chest. Global headquarters dotted the map. Fledgling biotechs toiled in their shadow. Tens of thousands of employees commuted from manicured suburbs to manicured corporate campuses. Crucial meetings were held at golf courses. And there was that close relationship with officials in Trenton, the state capital.
But New Jersey’s dominance in the pharmaceutical world is lessening. Consider the tale of Steve Weissman. Like thousands of other highly skilled professionals, he became a victim early last year of the cutbacks and mergers that are sweeping the industry. After working 18 years as a chemist at Merck, he found himself looking for a job and spent months crisscrossing the state, networking and interviewing until, last winter, he finally became a success story by landing a good position—in Massachusetts.
“Landing a job in the pharma sector in New Jersey during all of 2009 was exceptionally difficult for me and other displaced chemists I was in touch with. You had a perfect storm of the recession combined with a downturn in R&D productivity in the large-cap drug sector,” Weissman, who asked that his new employer not be named, tells NJ Spotlight. “As a result it became a real buyer’s market for those small- to mid-cap drug companies that were doing some small-scale hiring. The competition was pretty fierce for those few openings in the New Jersey/Pennsylvania region.”
There are no statistics on the number of people who, like Weissman, found jobs in the greater Boston area, where numerous drug makers and biotechs employ thousands of people. But there is no question that the mergers Weissman mentions were like a shock to the New Jersey’s economic system. Over the past several months, two global headquarters disappeared from New Jersey and a US headquarters campus lost hundreds of jobs.
You can read the rest here… [Editor's note: We provided a link to this story yesterday, but thought a more comprehensive look was in order. We would also like to note that we authored this piece several weeks ago. And finally, we dedicate this to the memory of Bob Franks, who granted us one of his last interviews before his untimely passing last month.]
Nathan
Unfortunately, I know dozens and dozens of identical stories… This is a very tough time for the pharma industry, but for chemists in particular. Most people outside the industry probably believe that the turmoil within pharma has to do with the recession. This just isn’t true. Many (probably most) of these jobs are simply just gone forever. Pharma R&D is shrinking in real dollars (not inflation adjusted dollars) and the research that is left is rapidly going overseas. In my corner of the big pharma world, the US R&D sites serve primarily to design, direct, and manage the thousands of “bench” scientists who are actually doing the real labor over in China and India.
pharmavet
Nathan, you are mostly correct. The majority of Pharma’s problems i.e., patent expirations, etc.) are secular in nature. However, the recession has accelerated these trends with 10% unemployment and vastly reduced purchasing power. Given their expense, quite frankly, drug purchases have become a discretionary item (read stories on Rx abandonment), much like the food vs rent money argument. The pharma industry up to about 10 yewars ago is no different from the US auto industry in Detroit in the 1970’s, which at the time faced little competition. However, like drugs, cars became expensive over time relative to purchasing power, and the competition from high quality, low cost foreign imports eroded sales of US brand cars just like generics have eroded the sales of branded US drugs. In addition, Detroit suffered from a chronic lack of innovation similar to Big Pharma. Regulatory safety requirements added to the cost of cars just as regulatory hurdles have added to the development cycle and cost of drugs.
In summary, just as General Motors becaume a “mature” industry, so has Big Pharma. Mature industries are either self-sustaining if they can rediscover innovation, get bailed out, or both; otherwise they either die or get replaced by something smaller, more nimble and entrepreneurial. The behemoths that were GM, Merck and Pfizer will no longer exist along with the tens of thousands of their jobs that will likewise disappear. To think otherwise is simply delusional. Whole industries, like cars or drugs have life cycles. We are seeing the end of the Big Pharma life cycle.