After a wave of layoffs in 2011, it appeared that the drug industry was headed towards a more promising 2012 from a jobs perspective. Yet 2012 has provided harsh evidence that optimism regarding the workforce may be premature, and that it’s anybody’s guess as to how 2012 will play out.
The pharmaceutical industry is being buffeted by any number of “cross-currents,” says John Challenger, CEO of Challenger, Gray & Christmas and renowned job market guru. “Pharma continues to go through restructuring,” Challenger says. “Patents are expiring. The new healthcare law effects are still being seen. And there is still general uncertainty in the economy. This is leading to a new spate of layoffs.”
In other words, says Challenger, the difficult period of transition that the industry is going through needs many more years. “We have plenty more to go before things get back to an equilibrium.”
Layoffs such as those recently witnessed at AstraZeneca point to the fact that, without blockbuster drugs in the pipeline, manufacturers are under immense pressure to cut costs. There are glimmers of hope regarding blockbusters, says Challenger—recent positive news in Alzheimer’s research and development, for example. But on the whole, the end of the blockbuster era and the paradigm shift that has ensued still need to play out. Government deficits are also weighing on the pharma sector. “We know cuts are coming to programs that will mean less insurance and reduced reimbursements,” Challenger says.
Are Jobs Going, or Shifting?
Layoffs do not necessarily mean overall job loss, of course. “I do think there are places for people to go,” Challenger says. “Big companies are laying off and rolling out [employees], but people do go to work for smaller, more nimble companies that are finding niches.”
A lot of those reportedly laid off are not tied to the pharmaceutical sector, of course. Workers in accounting, sales, and finance, and even some in science and engineering positions, can take their skills outside of pharma. Approximately 30% to 40% of those workers whose skills are transferable do indeed move to other sectors when they are laid off, Challenger estimates.
Back to the U.S.?
Another problem facing drug manufacturers is that, while they have been laying off, they are still looking for competent employees in certain skill areas. Some experts point to a “skills gap” that perplexes the industry. “There’s been a lot of talk about this,” Challenger says, “especially in what you might call semi-skilled positions” such as bench technicians and line operators. These jobs are going overseas due to wage pressures (i.e., it’s still much cheaper in places like India and China), or due to the fact that manufacturers in the U.S. are not finding enough qualified technical staff.
But there may also be a “back to the U.S.” movement as well, Challenger notes. Manufacturers are building facilities overseas to take advantage of those markets, but “some have faced quality issues that were worse than expected, and this is leading them back home.”
“Right now, it’s going in both directions,” he says. That is, jobs are heading overseas, and they’re moving back to the U.S.
The biopharma industry continues to rebound as well, Challenger notes. “There seems to be more capital available, more interest in funding startups and new areas of development.” Also, Challenger says, “FDA is opening up the pipeline a bit” and approving more new drugs.
“There’s a wind in the sails of biopharma.” The companies that are growing are not necessarily large and well known, so it’s hard to define exactly where hiring is taking place, and which jobs are hot.