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The New, Nasty, Normal

This is not a happy column by John Carroll at FierceBiotech. But it’s an accurate one. He references the period just a few years ago when Pfizer closed its Sandwich site in the UK and Roche closed Nutley, NJ, among other upheavals.

That period of intense Big Pharma turmoil, though, has failed to create a new normal that can offer investigators greater confidence that they’ll be able to keep their jobs. And the disruption is continuing with a new wave of restructuring every bit as traumatic as the first tsunami of makeovers.

Honestly, I don’t know anyone in this business, large company or small, that can say truthfully that they have great confidence in keeping their jobs. Certainly not with any time horizon as great as, say, four years, the time between the closures mentioned above and now. Turmoil is the new normal; Carroll’s right about that. It’s been this way for years now, to the point where we hardly notice it, except when another dramatic shakeup hits.
That’s why I tend to lose patience with critics of the drug business, even though they may have other valid points, when they start going on about big, complacent pharma, drowsy and bulging with cash. It’s hard to square that picture with the experience of actually working in this industry, when it feels like some sort of lunatic combination of a roller coaster and a demolition derby. If drug companies are such unstoppable money machines, how come everyone seems to be running around in Headless Poultry Mode?

54 comments on “The New, Nasty, Normal”

  1. pete says:

    Accompany that article with Bloomberg’s story on Amgen’s trying to get a leg up on biosimilars:
    http://www.bloomberg.com/news/articles/2015-03-09/bracing-for-biotech-copycats-amgen-plans-imitations-of-its-own
    Not too far back, the thought of a major US biotech making a broad business plan out of going after biosimilars would’ve drawn loud, derisive snorts. (..and probably still does in some circles)
    But it’s “sink or swim”, 2015-style.

  2. The Aqueous Layer says:

    Layoffs typically happen on Wed or Thurs here. When end of day Thurs rolls around, I figure that I’m good for another week.

  3. Stu West says:

    It’s true that if you have a PhD in science things look pretty dire. The picture probably changes a bit if you look at the industry from the point of view of someone with an MBA in Pharmaceutical Management or whatever, though.

  4. Anon says:

    I always love the MBA argument. The market cap of biotech companies has more than tripled in five years. If you are a PhD with any talent you should have left to start or join an early stage company… you’d probably be rich and your own boss. There is more capital available today than any time in history to start a biotech company. So if you’re a brilliant scientist, stop complaining on bulletin boards about MBAs and build something.

  5. Stu West says:

    Turns out drug companies are unstoppable money machines after all!

  6. The Aqueous Layer says:

    Hot off the presses:
    Amgen subsidiary Onyx Pharmaceuticals delivered good news last week. But it has received bad news in return. Thousand Oaks, CA-based Amgen (NASDAQ: AMGN), which bought Onyx in August 2013 for $10.4 billion, is shutting down Onyx’s South San Francisco, CA, facility and plans to lay off about 300 people, Xconomy has learned. That’s about 40 percent of Onyx’s remaining staff of 750.

  7. John Wayne says:

    @4 The people who are the least happy with the current state of research is pharma are the folks who want to do science in the trenches. Others may get paid a lot more, but you get paid to mix chemicals together instead of make slides; for a lot of people, making slides is torture.
    If you try to launch a new company, you don’t get to do much experimental work. People who love science don’t want to become the boss. The trenches of science are an increasingly undesirable place to be, and that isn’t good for anybody.
    Before I went to grad school I worked for an unnamed larger company back in the 90’s. When I had a chemistry problem I didn’t ask a PhD for help, I asked the guys who had been at the bench for 30 years. These folks had a staggering amount of knowledge about how to get things done. It’s almost impossible to find those folks now, because nobody cares about their knowledge.
    We need to value both the drive to create a new group doing research and the folks who love to delve into a specific problem; it’s not one or the other.

  8. smurf says:

    Give up research and move into Clinical Development, it pays the bills and the job is not too bad. After being laid off by Big Blue I moved to a smaller CRO, and then to one of the bigger players. It is a different world, but I don’t see clinical trials going away any time soon.

  9. Chemjobber says:

    @7: Thank you, John Wayne, you said things much better/smarter than I would.

  10. Anon2 says:

    Again, I wonder if we should start demanding better severance packages since this is the norm.
    The issue though is that there is such a huge over supply of PhDs a company and look you over pretty easily.
    @6, I can’t imagine how enraged Onyx R&D folks are right now. Their management just spit in their face.

  11. Am I Lloyd says:

    All I can say is that we’ll see the light only when the bugs take over – when antibiotic-resistant influenza and TB and pneumonia start running rampant in this country until it resembles a WW2 POW camp. Perhaps then people will be jolted into reality and jumpstart drug discovery again. Seriously.

  12. Farmhand says:

    As obnoxious and just plain wrong as @4’s comment is (hey, he’s probably an MBA, so what does he know?), there is one element of truth: More than ever scientists in Pharma large and small need to take charge of their own careers and not count on long-term employment at one company no matter how brilliant and accomplished they are. This includes always having a few irons in the fire for what (and where) your next job might be and making sure your skillset is at the top of the demand curve. It also means a lot more risk-taking and never ever equating the good things your employer says about you to any guarantee of job security. I was given that advice long before M&A became a regular event in Pharma. It was good advice even at a time when, quite frankly, scientists could be complacent about their careers and still do OK. Those days are over and job insecurity is the new normal. This too will pass. Some will hunker down and manage to keep their careers from being run off the road. Others will leverage their skills in a new direction and change careers. As more and more Pharma scientists drop out of R&D and fewer new scientists choose a career in Pharma, things will improve. Until then, fasten your seatbelts and keep both hands on the wheel.

  13. Farmhand says:

    And kudos from me, too, to @7 John Wayne for capturing the essence of the bench scientist’s ethos.

  14. Doug Steinman says:

    @10: I don’t think better severance packages will improve the employment situation for scientists. Scientists will not have better job security until management embraces the concept that science and the scientists who provide it have real value. Currently, management’s concept seems to be that science is a thing that can be paid for as a one time expense and has value only because it represents something the company can sell at a profit. Thus, the drug, medical device, etc. becomes something that is divorced from the individuals who invented and produced it. Those individuals are then perceived as not being valuable to the corporation. Until that changes (and don’t hold your breath until it does) scientists will continue to be fed into the giant meat grinder that is unemployment.

  15. Anonymous says:

    Don’t expect things to get better. The standard R&D model has been in decline with diminishing returns for the past 60 years and is now recognizably broken, failing to deliver any return on investment above cost of capital. And since growth depends on capital, and both growth and capital absolutely depend on a positive return on investment, the industry is now in terminal decline. The show is over, folks, so get out now while you can, before you’re pushed out and there’s nothing left to get back into. Move out and move on.

  16. Frank Adrian says:

    This “new” normal is only a symptom of the inevitable failure of the corporate (including finance)/government complex due to its cancerous growth. We created a potential evolutionary extension of ourselves – a potentially immortal legal creature, deriving its “rights” as a sentient being from our laws, and it became symbiotic with us. So symbiotic that we let these life forms into our individual lives.
    However, relationships between those of widely -varying power are often neither fair nor beneficial to both for long. The corporation turned, and assimilated the government using the legal system that gave it life as a weapon against us. It is now easily detected because of its size and its impact on the environment, including political and economic environments.
    The only question now is whether the neurons in the body politic can actually start working together as an intelligent unit to deal with this problem. If they do not harness this life form (and, perhaps, eradicate it), it will destroy them, as resistance is futile – it is a superior legal creature.
    Start thinking, Neanderthals.

  17. biotechtoreador says:

    “management’s concept seems to be that science is a thing that can be paid for as a one time expense and has value only because it represents something the company can sell at a profit”
    Why else would a profit seeking company do science if not to make a profit? Nothing wrong with pursuing science altruistically, but save that for charities and governments who don’t have fiduciary responsibilites to maximize profits. I do think biopharms may be seeking to earn said profit faster than before but I think this is driven by investors (i.e. realistically EVERYONE with an IRA/401(k)/pension) who want greater returns.
    Severence packages are a nice idea, but will never happen in the absence of unionization (which will also never happen in pharma): no reason the ICWU couldn’t start recruiting at PFE or AMGN. Be careful what you wish for, though: the auto industry provides a great example of how both management and unions failed their workers. Even if severance packages were to be given, where would the extra compensation expense come from? Reduce profit and you reduce investment, which will reduce the very jobs you’re seeking to protect.

  18. Anonymous says:

    P.S. Everything, even entire industries including the pharma industry, has a natural lifecycle of growth, saturation, and terminal decline. This bell-shaped curve is the mathematical derivative of the exponential decay curve that represents the law of diminishing returns. And *everything* obeys the law of diminishing returns as long as: 1) Resources and opportunities are ultimitely finite, which they always are; and 2) We tend to pick the best opportunities (low hanging fruit) first, leaving the crap for later, which we always do.
    In fact our entire society and world economy has probably reached its peak within the last decade as we’ve already used up more than half the world’s capacity and resources. It’s all downhill from here.

  19. Anonymous says:

    P.S. Everything, even entire industries including the pharma industry, has a natural lifecycle of growth, saturation, and terminal decline. This bell-shaped curve is the mathematical derivative of the exponential decay curve that represents the law of diminishing returns. And *everything* obeys the law of diminishing returns as long as: 1) Resources and opportunities are ultimitely finite, which they always are; and 2) We tend to pick the best opportunities (low hanging fruit) first, leaving the crap for later, which we always do.
    In fact our entire society and world economy has probably reached its peak within the last decade as we’ve already used up more than half the world’s capacity and resources. It’s all downhill from here.

  20. The guys in suits want to make the money, and they’re in a position to get it. The guys doing the work get, always, the smallest amount of money that the suit-wearing guys think they can get away with giving them.
    “Go start your own company” just trades one bunch of guys in suits for another one, unless you want to put on a suit yourself. And, as noted, that choice is incompatible with actually doing any science.

  21. steve says:

    Number 4 is an idiot. Of course the market cap has gotten bigger – companies have merged, which makes larger companies, which result in larger market caps. They then fire tons of people so their costs go down and their profits go up. Who does this? Idiots like #4 MBA.
    Does he really think this is all a sign of progress? Have these behemoths become more productive? Do they produce more medicines and benefit mankind? Or do they primarily produce me-too products and buy up small biotechs to get innovative products?

  22. Farmhand says:

    @16 Frank Adrian
    Hey, that’s Dr Neanderthal.

  23. Pharmacology is cool says:

    After working at 3 research sites over 12 years, all of which got relocated or closed down, I gave up and moved into Medical Affairs – best thing I ever did. A better salary and finally some kind of job stability.

  24. [AUC]unbound says:

    It took many years for the research based drug business to dig the hole it is in, and continues to dig ever deeper. Unfortunately, it will also take many years for well run research based drug companies to eventually re-emerge, after management stops digging.

  25. Anonymous says:

    For those criticizing #4, please re-adjust your sarcasm detectors.
    I was a bench scientist who now works in the early stage finance of startups. New Pharma/Biotech startup financing is near impossible right now unless you have something like CRISPR/Cas9. VC’s want phase 1 safety data, preferentially with efficacy to boot and a validated target, mechanism of action and large market. Try bootstrapping that, or try to do that with Angel money……good luck! It takes a really hot lead compound, academic partnerships, several SBIR’s and perhaps a philanthropic organization to get to the point where the VC’s or big Pharma/Biotech will even think about funding/strategic partnerships.
    We are lacking the investors who are willing to write lots of 2-4 $M cheques to find the promising leads with animal data. These used to be VC’s, but these days VC’s only like promising bets with clinical data.
    I like the idea of the superbugs lighting a fire under the folks with money. I doubt anything else will change peoples minds.

  26. anon2 says:

    @17, I think it was marginally reduce the bottom line, while drastically reducing the number of times a company can change hands.

  27. steve says:

    #26, I don’t think you read #4’s post. He’s saying that early startups (where I work as well) are awash in money. He clearly has no idea what he’s talking about, which is unfortunately typical of the MBA’s running the industry. They just don’t have a clue.

  28. Poison Ivy League says:

    So I guess that institutional memory is no longer a valued commodity…

  29. Anonymous says:

    I’ve always assumed that a big part of the reason scientists get the short end of the stick is because of their stereotypical personality. In high school the MBA was the popular “go-getter” guy with all the girls, while the scientist was getting wedgies. In adult life they are the guy with all the opportunity and money. They get what they want because they have strong personalities. With a weak submissive personality, you’ll never get your way or be treated fairly in this dog eat dog world.
    I don’t see scientists unionizing or lobbying to get their way. why not? really, someone please answer this for me I want to know.
    These stereotypes are stereotypes for a reason, because they are statistically true. Those that seem easy to take advantage of, will be taken advantage of.

  30. anon says:

    @30: In academia the grad students and post-docs could unionize. But then that would be an even stronger incentive for science-minded immigrants to come to the the west and want to stay and get green cards, which just increases the competition for the limited good jobs in industry even more.
    Unless they are from western countries, 90% of immigrants in academic Scientific Research into the west want to stay, and it would be 100% if unions were set up.

  31. steve says:

    #30, I think it’s more the golden rule – the ones with the gold make the rules. MBA’s handle the money and so they rig the game. It’s the same reason why our congress is run by millionaires. Scientists seek truth, suits seek money. In the end, the real money goes to the ones rigging the game and the ones who actually do the work and produce (scientists, teachers, etc) get the shaft.

  32. anon says:

    Man, sometimes this blog is hella depressing.

  33. KD says:

    What’s even more depressing is getting calls from recruiters for QC/Production Associate positions that are paying $18-$22 per hour in the Bay Area which is all that is out there for experienced ex-Med Chemists.

  34. Anonymous says:

    @33: Depressing, buts lots of honest truth behind many statements.
    I whole heartedly agree with #7 John Wayne. I know so many people in the labs that just want to do good science, but are bogged down by the bureaucracy. There are a lot of problems, and senior management knows it, but choose not to change anything because they enjoy the gravy train.

  35. Rock says:

    Yes, the mergers and layoffs are in response to a financial weakness down the road, usually patent cliffs. However, unlike many other industries which start to cut employees when they are operating in the red, big pharma starts to cut when their profit margins look like they may drop below 30%. When Kindler took over as CEO of Pfizer in 2006, he promised Wall Street he would keep profit margins at 30% and by golly he did leaving countless workers without a job. I have no tolerance for companies who cut thousands of jobs while still making tens of billions of dollars a year in profit.

  36. Cellbio says:

    @20,
    Is it really incompatible to ‘were a suit’ and do science? I have witnessed the rise of idiots, in part because of the reluctance of scientists to be bothered to develop the skills to communicate, in terms relevant to other key audiences, how their technology connects to relevant markets (medical or deal making). Further, there is a reluctance to predict the future at distances where accuracy is impossible. In this setting, to simplify to a silly extreme, scientists can sound like they are saying, ‘trust me, we are doing good things that might have value some day’. And almost this exact things was said at a successful biotech by the head of R&D who could not bother to lower himself to the MBA level. Result? Total change of management and MBAs in charge and all the fun and joy you could imagine after that, including six sigma and process mapping, suggestions to pick the winners from the beginning, portfolio management, open air work spaces, it goes on and on.
    Having lived through it, and deciding this is a contributing cause to our industry’s decline, I made it my personal goal to try to ascend to key leadership and be successful through good science rather than hyperbole. I am also pushing every bright scientist I know to learn the terms, speak the language, and deliver what is required to obtain funding and control drug development decisions so we try to prevent the next generation of scientists from being left out of leadership positions. In the end, and would you be surprised, it is not hard to beat them at their game.
    And finally, though not at the bench, I still think I am doing science, even if talking to bankers while wearing a suit. it is part of the job these days.

  37. Thomas McEntee says:

    Re @20, “The guys in suits want to make the money, and they’re in a position to get it.”, the market capitalization of PFE is $207B and there are 6.129B outstanding shares. Ten thousand angry scientists who can’t take it any more buying 1000 shares each adds up to a measly 1MM shares, less than Ian Read personally holds. And his holdings pale compared to institutional holdings like Vanguard Group (348MM), State Street Corporation (279MM), BlackRock Institutional Trust (175MM) etc., etc.
    Union talk has been around forever. I heard it in a company lab in NJ in the early 1960 and it has gone nowhere. One could look to one’s professional society to agitate for its membership but too many have become self-serving lobbying organizations. Sad situation.

  38. cranker says:

    @30
    I agree that their are personality differences between scientists and jocks. However, the problem is really due to oversupply. If their wasn’t hundreds of scientists ready to fill a vacant position, the scientists would be paid better, get more respect, and not be so disposable.

  39. Sanger says:

    @37 Preach. I have a question though. What exactly do you mean when you say “speak the language, and deliver what is required to obtain funding and control drug development decisions”?
    As a student in the biomedical sciences I feel like I’m being assaulted by negativity at every turn. Whenever the subject turns to jobs, all anyone talks about is how bleak the situation is. If you’re talking about academia it’s always “Grants are getting impossible to get. Tenure-track positions are impossible to get. Tenure is impossible to get. There are too many science PhDs. The system is broken.” In industry it’s “Everyone is being laid off. R&D is being slashed to the bone. M&As are the new norm. Venture capitalists are stingy with biotech.”
    Meanwhile, a pair of 24 years old who invented an app that makes pictures disappear have reportedly received offers of $19B for their company despite their total revenue to date being $0.00

  40. Cellbio says:

    Comparisons to tech or celebrity wealth are really depressing.
    And truthfully, an assessment of a career in science can be depressing too. But sticking with the idea that this is your path…
    To answer your question really well requires hours of discussion, but in a nutshell, you need to know what the real situation for funding is, including things like: who has money (not everyone that appears to), what are they investing in, and importantly, what drives them to make decisions. If you can fill in those unknowns, and without telling lies, fit your story to their expectations, you then have a chance. To get there, you need to do things like know every company in the portfolio of the firm you are talking to, or if a bank, know the opinions of the analysts, know where they worked before, know the prior failures they’ve been associated with and game the discussion. Or to put it another way, know the ‘literature’ and ace your oral qualifying exam.
    From a pitch strategy perspective, you should know you are doing something great, so the job is not exactly to get them to see your wisdom through force of argument but to entice them to spend enough time engaged to connect and make their own judgement through rationale built upon their own experiences and preferences.
    Additionally, you need to know the larger forces of the market, which you appear to with the M&A comment. Know what is their main driver, usually timely return. Speak to the time and cost until someone else cares about the development prospects. it is great to speak of grievous medical need, but to be honest, for many, that is great if the rest of the story fits. Same for market size. Too many times people detail the commercial market (big, really really big) without touching on the start-ups real exit, which is not after you hire your sales force but when big pharma acquires the asset. Also, too much time is spent on technical detail, things like unique binding mode, awesome affinity, that are rarely selling points.
    Final thought that jumps into my too tired head is to understand what will make them comfortable. If possible, learn what are the biggest deal breakers for them, tech risk, team risk, IP risk, etc. This may result in plan that includes ceding control to appointed CEO, but then everything you do in this non-scientific vein shifts to making CEO/board comfortable while you assure they gain respect for the fully integrated way that you advance projects.
    BTW, have you ever had a mentor in how to build and run a venture? Probably not, and it is hard work to figure it out. Best teacher has been failure.

  41. Anonymous says:

    I’m not convinced this eco-system of startups is anything but death-throes anyway.

  42. Thomas McEntee says:

    @38 (that’s me…) 10E4 * 10E3 = 10E7. Too many years, too much C2H5OH…

  43. dearieme says:

    “it feels like some sort of lunatic combination of a roller coaster and a …”: that can’t be right. Roller coasters go upwards part of the time.

  44. anonymous says:

    I hear most of the AZ Waltham infection chemists got moved to cancer chemistry, rather than getting laid off in the spinoff.

  45. anonymous says:

    Hardly worth mentioning, but “The New, Nasty Normal” keeps making me think of “the nattering nabobs of negativity.” Spiro Agnew would be proud.

  46. Anonymous says:

    I think I’ll go listen to Lenard Cohen in the car with a hose pipe stuck to the exhaust.

  47. Jamie says:

    What’s funny is that for years I’ve been reading these articles, 500 laid off from pharma company X, 2000 laid off from company Y.
    Yet I never ever see job ads for companies hiring 500, 1000, 2000 people! Ever! Virtually nothing out there!
    It appears that if you’re lucky you get one shot at a job today then when it doesn’t work out you end up an Uber driver. A career in chemistry appears to be on par with those who aspire to become actors.

  48. Jamie says:

    What’s funny is that for years I’ve been reading these articles, 500 laid off from pharma company X, 2000 laid off from company Y.
    Yet I never ever see job ads for companies hiring 500, 1000, 2000 people! Ever! Virtually nothing out there!
    It appears that if you’re lucky you get one shot at a job today then when it doesn’t work out you end up an Uber driver. A career in chemistry appears to be on par with those who aspire to become actors.

  49. Anonymous says:

    Jamie – I used to volunteer for my former employer’s science outreach program for high school kids. Looking back, what we kid was kind of like encouraging kids to plan on careers as Hollywood stars, pro athletes, etc.

  50. fajensen says:

    @17 – “who don’t have fiduciary responsibilites to maximize profits. ”
    That assumption is just some neo-liberal bullshit that Milton Friedman just made straight up; Even Forbes took a big dump on that (so probably, it isn’t even working for the 1%’ers too):
    http://www.forbes.com/sites/stevedenning/2013/06/26/the-origin-of-the-worlds-dumbest-idea-milton-friedman/

  51. Jodpur says:

    In my experience (I’m not one though I’ve worked alongside many over the decades) chemists value job security to a far, far higher extent than other disciplines.
    Can I just ask why?
    (When I recently asked our chemistry team, “what would you willingly swap for job security in your career” there was a deafening silence, literally nothing….).
    Perhaps a lot of the unhappiness reflected above comes from
    this perceived lack of options?

  52. steve says:

    #51, right idea but wrong label – Friedman was not a “neoliberal” (whatever that is) but a dyed in the wool conservative, frequently quoted by George Will and others of that ilk as noted in the article you cited.

  53. holly says:

    The term liberal has had different connotations over the last several hundred years.
    Liberals once backed strong property rights, and minimal govt intervention in people’s lives. (Adam Smith was a ‘liberal’. But more in a libertarian sense’)
    Recent US history and fox news/ msnbc have bastardized the term liberal to mean a social or moral liberal who backs government intervention in most spheres of a citizens conduct. This is the EXACT OPPOSITE of the original meaning of the term.
    Neoliberalism is a term used more in the spirit of the original meaning of the word liberal. Stay out of my back yard, little government regulation of anything, markets rule, etc.
    There are multiple variants here, dependent upon whether you are talking about economic liberalism vs social liberalism.

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