More Big Pharma Layoffs: What This May Mean

Includes: JNJ, MRK, PFE
by: Derek Lowe

Unfortunately, it appears that Johnson & Johnson (NYSE:JNJ) is continuing to trim their chemistry staff. I’ve heard from people there that another round of layoffs have hit, most of them to take effect later this year. And as usual, the company doesn’t seem to be making any public announcement about this. Readers with more details are welcome to add them in the comments.

This has clearly not been a good year to be a drug researcher here in the US, what with the Bayer and Pfizer upheavals earlier and now this. There seem to be several reasons for this, some of which are specific to the companies involved. Pfizer (NYSE:PFE), for example, was faced with some hard choices after taking some grievous hits in their advanced clinical pipeline, with the torcetrapib disaster being the intolerable last torpedo. Bayer ended up paying a lot more for their merger with Schering AG than they expected to (a merger that was surely going to involve some job losses even before the price went up). J&J, for their part, seems by their actions to believe that their future lies more in running fewer in-house programs and inlicensing more from other people.

And there are trends that affect everyone, on top of these local troubles. Low clinical research productivity at many big firms is proverbial, which is why some of these mergers and re-orgs are happening in the first place. In the preclinical world, a lot of routine (and some less routine) work is going overseas, which is no news to anyone. The changes in the industry are catching even really good scientists, so it’s definitely not safe to be doing an OK job on things that pretty much everyone else is doing. There aren’t any safe jobs in the business, and there haven’t been any for quite some time now, when you look back on it.

My belief is that we’re witnessing a broad shift in this country to a larger fraction of researchers being employed at the smaller companies. One thing that the US has which not many other places have imitated is our venture-capital culture. Our mechanisms for funding ideas are second to none in their speed and scope. Given that, I think that we may be heading into a world where drug research is broken down into smaller independent units – startups. These shops open up (and close down) with greater speed, and their successes and failures are likewise magnified.

Instead of Huge Company X moving along with some projects working really well and some dragging along, imagine each therapeutic area (or in extreme cases, each project) split out into a separate company. Some will work, some won’t, and some will move up and some will disappear. This affects the way these projects are run, naturally. In a smaller company, there’s more pressure to get something to the clinic (and the market), and at the same time there’s an increased willingness to take chances and try out new approaches to get there.

If this idea of mine is true, it means that we’re all, on the average, probably going to end up working for a longer list of companies than we might have planned on. (I already have!) It also means that the locations that have the best small-company culture will have a leg up, since they have access to a larger (and more easily accessed) pool of equipment, facilities, and potential employees. Keep in mind that this is the voice of someone who’s worked for larger companies, and is now working for a smaller one in Cambridge – but think about it.