If there’s a major layoff or plant closing coming in the drug industry, chances are Derek Lowe will be one of the first to know about it. As the writer and administrator of the popular In the Pipeline blog, Lowe gets more than his share of anonymous tips and inside dirt before they become tomorrow’s headlines.
We spoke to Lowe to get his insight on some of the industry’s major worker-related issues in 2012—especially, what’s happening to all those jobs?
PhM: You have your ear to the ground better than almost anyone in our industry. What are you hearing for 2012 in terms of pharma layoffs and hiring in North America?
D.L.: Not good. The big companies still appear to be laying off, and the pain doesn't seem to be anywhere near over at the ones with the biggest patent expiration problems (AZ, Lilly). The smaller companies aren't very cash-rich, to put it mildly, so they won't be able to soak up the excess completely. But I hope that the startup environment is getting a bit better; that's my only ray of sunshine these days.
PhM: You’ve been critical of Pfizer, AstraZeneca, and other companies for suggesting that layoffs are coming, but not being specific about where cuts will take place. Why do you think it’s better for companies to make cuts and “get it over with” than to give employees a heads-up that cuts are coming?
D.L.: I think by the time it gets to layoffs, everyone knows that they're a real possibility. These things rarely come as a complete surprise. I don't mind a bit of advance notice—a week, maybe? But this "We're going to lay some of you off, but we're not sure how many, or when we're going to tell you, only that it'll be a few months from now" . . . well, that's a productivity killer. The people best equipped to leave bail out, if they can, and those are often people that a company would rather keep. And the ones that are left don't get much done, which makes the situation at the company all the worse.
PhM: The Wall Street Journal wrote of AstraZeneca: “The aggressive reduction in jobs—motivated by frugal insurers, generic competition and a dearth of new medicines—has transformed the company into a leaner organization that is now outsourcing much of its drug research, making it one of the starkest examples of an industrywide trend.” Do you agree that this “lean and mean” path is one that manufacturers must take, from a business perspective?
D.L.: If they're a publicly traded company, they sure have to look like they're doing it, anyway. It's what the investors expect by now: the hardest cost-cutting possible. But even smaller companies that haven't gone public yet (or never will) are outsourcing pretty thoroughly, so it's clearly not just something to appease Wall St. It really is too expensive to develop drugs, and companies really are trying to cut those expenses wherever they can. The big question is, how much is too much? Problem is, you don't know you've cut too deep until you see blood.
PhM: In your mind, where are pharma jobs going? Overseas? Disappearing? Shifting to biotech and other industries?
D.L.: Some of each. Some of them are just flat-out vanishing. The number of jobs appearing in the lower-cost countries does not, I think, match up with the number lost in N. America and Europe. It's not a zero-sum game; it's worse. But I do think we're in a trend where the proportion of people employed in drug R&D at smaller companies is increasing, compared to the big ones. The total number, though, has to have gone down - wouldn't you think?
PhM: Drug companies (and other manufacturers) are saying they can’t find people with the skills they need. Is there a “skills gap” in pharma? Are too many jobs outmoded?
D.L.: I'm not so sure about that. If drug companies really are saying such things, it may just be window dressing, to make people less upset about all the outsourcing going on. I think a more honest assessment would be for them to say "We can't find people with the skills we need who will work for what we want to (or have to) pay them".
PhM: We’re hearing rumblings about a “back to the USA” movement in overall manufacturing, as offshoring gets more expensive and continues to be risky. Your thoughts on the potential for this phenomenon in U.S. pharma, whether in R&D, manufacturing, or other areas?
D.L.: I think it's real, but again, the numbers are not going to add up. Some companies seem to have found that they've over-outsourced, and that the problems (time zones, communications, oversight) have outweighed the benefits of spending less money. But the number of jobs coming back will not, I think, come anywhere near making up the number that have been lost. (See above—I don't think that the number of jobs created overseas makes up for that head count, either). There are just fewer people doing this stuff—it’s so expensive, and so risky.