Jobs go down the tube at big pharma

February 20, 2010

If only there was a pill to make it better. With job losses in the thousands, the giants of the pharmaceutical industry have a headache. You might have thought that companies that produce and sell drugs would be fairly immune to the effects of the recession – after all, people still get sick, even in a credit crunch – but apparently not.

Over the past few months several pharmaceutical giants have announced mergers and reorganis-ations. British-based Glaxo Smith Kline recently announced it might shed 6,000 jobs globally as part of a restructuring programme, with an undisclosed number to go from its 18,000 UK workforce.

Merck, Astra Zeneca and Pfizer have also announced thousands of job cuts, and Roche’s decision to merge with the American biotechnology company Genentech this month was the third announcement of its kind since January.

The problem, said Dr Paul Martin of the University of Nottingham, is that while the costs of drug research and development are rising, the number of drugs licensed to come onto the market remains at the same level. “That makes each drug more expensive to produce,” he said.

The trend is driving mergers as companies struggle to cut their costs. Some are outsourcing drug development to smaller biotech firms around the country or even abroad, to India and China. But many of these smaller British biotech firms have also been hit badly by the credit crunch as most are funded by raising revenue from capital markets rather than from selling products.

Phil Gould, former head of product introduction at Glaxo Smith Kline, is watching developments with alarm.

He said: “How can companies that already have some 100,000 employees cope with being even bigger? People are pouring out of these companies: there is a trend towards consolidation on the one hand, and outsourcing on the other.”

These are difficult times to nurture a career in this field.

Gould, who now acts as a business consultant to the industry, admitted that the path of his career was now one that many senior executives in the pharmaceutical industry could expect to take: up and out.

After working in drug design for Pfizer, Gould spent 10 years at Glaxo developing a closer relationship between the staff who market drugs and the scientists who create them.

“One of the biggest issues now is how to bring the commercial process together with R&D at a much earlier stage,” he said. “It’s no good spending $1 billion developing a drug and taking it through clinical trials if there is no market for that drug, or if it will be hard to get it licensed. There was an era when that sort of thing happened, but those good old days are long gone.”

Analysts have claimed that Astra Zeneca’s 2007 announcement of job losses at its Huddersfield plant was a sign that much British drug manufacturing would move to the developing world, in particular to India and China, with some predicting that one in three drugs could now be manufactured abroad.

Nick Stevens from the executive recruitment expert RSA agreed that jobs in Britain were being particularly hard hit. “This is now a very expensive and difficult country to develop drugs in. Marketing has shed 20,000 jobs globally, with many of those in the UK,” he said. “The industry has been transformed by expiring drug patents and higher regulatory hurdles: truly commercial skills are required from anyone wanting to be successful.”

Stevens added, however, that the picture for Britain was not all “doom and gloom”. He said that as traditional areas of the industry moved overseas or became defunct, new areas would replace them. “British biotechnology companies have been very innovative, although they now need intervention from the government to support them,” he said. “Entirely new areas, such as health economics and roles that combine science and marketing, have emerged. Careers can also be successfully built in support services, which are still strong.”

Some sales and marketing jobs have, however, been hit by evidence revealing that the traditional link between employing more staff and greater drug sales no longer holds true. Doctors, it seems, are no longer so willing to be wined and dined by drug reps pushing a particular drug.

Derek Smith (not his real name) is among those looking for a new marketing role after leaving his previous job as marketing director for an international pharmaceutical company.

He contemplated changing direction but decided instead to try to find a similar role in one of the small biotech companies. Smith said: “There’s no doubt that the spate of mergers will mean fewer opportunities in bigger companies, but there are also better opportunities with smaller biotech firms now that they are getting products closer to launch.”

But for senior executives, the move from a large company into a smaller one is often a shock and results in a lot of frustration, as Phil Gould discovered. He questioned his decision to leave Glaxo to become the chief executive of a biotech firm when he found himself picking sweet wrappers off the floor. “I realised that if I didn’t do it, nobody else would,” said Gould.

“In a big company you are often remote from the heartbeat of the business, but in a smaller biotech you are leading every decision. I felt that I was a resourceful person but I had moved into something that was underfunded and the whole process was based on raising money and looking over your shoulder. It was fairly precarious.”

Top pharmaceutical groups may be struggling to overcome their ailments, but Gould is optimistic the industry will reinvent itself.

“The era of a company relying on profits from a single big drug is over. There will be smaller businesses, developing more drugs,” he said. “Despite people’s perceptions, I wouldn’t have followed any other career. There are ups and downs, but the success of my day at work ultimately meant sick people got well.”

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