Over the last several years, Pfizer, GlaxoSmithKline, and Novartis -- and most other pharmaceutical giants, which once seemed unassailable -- have announced huge layoffs. Drug discovery jobs have disappeared by the thousands in the United States and by the hundreds in Europe as the industry has cut costs in order to adjust to what is widely perceived as the end of the blockbuster-drug era.
“It’s a whole big mess the pharmaceutical industry is in,” says industry journalist Ed Silverman, who edits the Pharmalot blog. “It’s an unfortunate set of circumstances. … The companies have had fewer new drugs in their product pipelines and … at the same time they’re facing expiring patents on the biggest sellers.”
According to the Factbook, the pharmaceutical industry discovered and released on the global market just 21 "new molecular entities" in 2010. (A significant number of new drugs each year are derived from already marketed drugs.) That's the fewest this decade, though similar levels were seen in 2007 and 2008.
Major companies were responsible for only seven of those new entities, demonstrating slippage in the traditional dominance of big pharma. Other figures provided by the Factbook bode poorly for the future of the drug pipeline: In 2010, the number of drugs entering phase III was 55% below 2007 levels. Other phases saw similar declines: 53% for phase II, 47% for phase I.
The implications for job seekers, both laid-off employees and new graduates, are dire. “
Most importantly, the industry is approaching what many people call “the big patent cliff” -- the imminent expiration of a large number of patents, which will allow generic drug manufacturers to produce cheaper versions of blockbuster drugs. In the United States alone, the patent exclusivity of more than 110 products is set to expire between 2012 and 2014, among them 14 blockbuster drugs. “The world’s leading pharmaceutical companies face considerable risk to their revenue streams in [the] next three years,” the Factbook concludes. The global economic crisis that started in late 2007, and pressure from governments and consumers to lower drug prices, aren't likely to help
Hemorrhaging jobs
Expert observers believe that big pharma is stuck, largely due to a broken drug discovery process. “Everyone’s frantically trying to come up with something because of course the rewards of finding a good drug that meets an unmet medical need … are tremendous still,” Lowe says. But, right now, “no one really knows how to increase the number of clinical successes.” All we really know how to do is to "cut costs on the other end,” he says.
Over the last several years, big pharma companies have been restructuring their organizations to make their operations leaner, through large-scale mergers, acquisitions, and risk-sharing partnerships. Global companies have announced the closure of entire therapeutic lines, R&D sites, and production plants, refocusing their resources on more promising areas. They have outsourced R&D activities to contract research organizations (CROs) and off-shored others to emerging countries such as India and China;
Whether big pharma will ever come back is another open question. “Have companies cut more than they should? I suspect many of them have,” Lowe says. “I think some people are waiting for some of the companies to slap their foreheads and go, ‘Oh my gosh, we messed up. We actually need to hire back a few thousand researchers.’ ” But, he says, that's not likely to happen. “They may do a little hiring back, or they may do a little less outsourcing, but I don’t think it’s ever going to get back to the state it was 15 or 20 years ago.”
Chemjobber adds, “The era of people working for a large company for 20 to 30 years is over.” He sees the R&D employees of the future working for a series of smaller companies. “I expect that unfortunately some of the large American companies or the large multinational companies … will ultimately collapse,” with newer, smaller companies taking their place.
Bloom is less optimistic. “All of these companies are saving tons of money, or at least they think so, by shipping off their research and their clinical trials to Asia and then everybody else is following them, much like it has been done with other industries in this country which don’t exist anymore,” Bloom says. “I think we’re just on our way to becoming one of those.” He adds that he would discourage anyone from pursuing a career in the industry.
“It’s a whole big mess the pharmaceutical industry is in,” says industry journalist Ed Silverman, who edits the Pharmalot blog. “It’s an unfortunate set of circumstances. … The companies have had fewer new drugs in their product pipelines and … at the same time they’re facing expiring patents on the biggest sellers.”
According to the Factbook, the pharmaceutical industry discovered and released on the global market just 21 "new molecular entities" in 2010. (A significant number of new drugs each year are derived from already marketed drugs.) That's the fewest this decade, though similar levels were seen in 2007 and 2008.
Major companies were responsible for only seven of those new entities, demonstrating slippage in the traditional dominance of big pharma. Other figures provided by the Factbook bode poorly for the future of the drug pipeline: In 2010, the number of drugs entering phase III was 55% below 2007 levels. Other phases saw similar declines: 53% for phase II, 47% for phase I.
The implications for job seekers, both laid-off employees and new graduates, are dire. “
Most importantly, the industry is approaching what many people call “the big patent cliff” -- the imminent expiration of a large number of patents, which will allow generic drug manufacturers to produce cheaper versions of blockbuster drugs. In the United States alone, the patent exclusivity of more than 110 products is set to expire between 2012 and 2014, among them 14 blockbuster drugs. “The world’s leading pharmaceutical companies face considerable risk to their revenue streams in [the] next three years,” the Factbook concludes. The global economic crisis that started in late 2007, and pressure from governments and consumers to lower drug prices, aren't likely to help
Hemorrhaging jobs
Expert observers believe that big pharma is stuck, largely due to a broken drug discovery process. “Everyone’s frantically trying to come up with something because of course the rewards of finding a good drug that meets an unmet medical need … are tremendous still,” Lowe says. But, right now, “no one really knows how to increase the number of clinical successes.” All we really know how to do is to "cut costs on the other end,” he says.
Over the last several years, big pharma companies have been restructuring their organizations to make their operations leaner, through large-scale mergers, acquisitions, and risk-sharing partnerships. Global companies have announced the closure of entire therapeutic lines, R&D sites, and production plants, refocusing their resources on more promising areas. They have outsourced R&D activities to contract research organizations (CROs) and off-shored others to emerging countries such as India and China;
Whether big pharma will ever come back is another open question. “Have companies cut more than they should? I suspect many of them have,” Lowe says. “I think some people are waiting for some of the companies to slap their foreheads and go, ‘Oh my gosh, we messed up. We actually need to hire back a few thousand researchers.’ ” But, he says, that's not likely to happen. “They may do a little hiring back, or they may do a little less outsourcing, but I don’t think it’s ever going to get back to the state it was 15 or 20 years ago.”
Chemjobber adds, “The era of people working for a large company for 20 to 30 years is over.” He sees the R&D employees of the future working for a series of smaller companies. “I expect that unfortunately some of the large American companies or the large multinational companies … will ultimately collapse,” with newer, smaller companies taking their place.
Bloom is less optimistic. “All of these companies are saving tons of money, or at least they think so, by shipping off their research and their clinical trials to Asia and then everybody else is following them, much like it has been done with other industries in this country which don’t exist anymore,” Bloom says. “I think we’re just on our way to becoming one of those.” He adds that he would discourage anyone from pursuing a career in the industry.