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In-Sourcing Chemistry: Lilly and AMRI

Here’s an interesting release from Albany Molecular: they’re announcing that they’re hiring “more than 40” chemists to work at Eli Lilly’s facilities in Indianapolis. They plan to hire them from the surrounding area – that is, I assume, that they plan to hire from the pool of people that Lilly has already let go.
This is interesting on several levels. I assume that AMRI’s salaries and benefits are such that it’s cheaper for Lilly to hire people this way than it is to hire them as Lilly employees. This is a technique (one could use the word “ploy”, depending on one’s vantage point) to get the work done without having to actually shell out for it. But then again, that’s what outsourcing is, exactly, and this is outsourcing without going to China or India. Instead, the invoices are routed through exotic Albany, NY, while you get to have the chemists right there in front of you, with the corresponding improvements in communication and turnaround.
Thoughts? Is this the beginning of the on-shoring of chemical jobs – albeit at a lower level of compensation? Or is this just a desperate move by a company that’s facing a hideous, hair-pulling patent cliff? Or both?

93 comments on “In-Sourcing Chemistry: Lilly and AMRI”

  1. Anonymous says:

    This has been commonplace at a number of companies for a while – Pfizer did it for ages and there was a whole building at Sandwich stuffed full of chemistry contractors. People were prepared to work long hours without sick pay or holiday pay with the carrot that maybe one day the temporary job would turn into a permanent one and of course all the time they were gaining “experience”. All in all another way for big pharma to exploit the gullible. There were post-doc level chemists earning less than $30,000 a year. Fine if you can’t find any other work, but really it is hardly a long term career option.

  2. weirdo says:

    This is the direction Pfizer U.S. and Merck are going, too, yes? Not sure how this is “exploitation” — these are real jobs with real pay. Just not at the levels to which medicinal chemists became accustomed. Those days are over, they’re never coming back, better get used to it.

  3. Dickweed Jones says:

    I think this is part of what we’re seeing all over the country in most fields. People lose their jobs and if they’re lucky, they manage to find one at 60% of their previous salary. Expenses are the same or more, so the standard of living takes a big hit. I know plenty of people in this situation.

  4. Anonymous says:

    I would rather do what I love for less compensation, than what I hate for more. If money is your objective, why go into chemistry in the first place?

  5. Redneck, New Mexico says:

    #4 (and #5)
    Where I live, there are plenty of people who dabble in chemistry that make whopping sums of money… until they get caught, or their house explodes.

  6. hn says:

    oh yeah, that’s good for morale

  7. David Formerly Known as a Chemist says:

    I really don’t get this. There aren’t enough details in the press release to explain why this makes any sense whatsoever. I can’t imagine the differential in the cost of 40 chemists between AMRI and LLY are so great to make this worthwhile economically. Anyone from LLY or AMRI that has some insight on this?

  8. anon says:

    It’s Indianapolis…the cost of living is cheaper anyway. J&J has been insourcing for a while; this allows them to avoid offering permanent positions by periodically terminating long-term contractors and then re-hiring them.

  9. C says:

    And let us not forget the middleman (AMRI) who will be able to skim $$$ for operating what amounts to a high end temp agency.

  10. ex chemist says:

    As someone who has been a victim of a site closure and struggled to find a similar job I would advocate any-port-in-a-storm economics. Times are tough for medicinal chemists. If someone is going to offer you employment, even if it is on a much lower salary, I’d jump at the chance. I wouldn’t want to be proud and out-of-work.
    The only risk I can see is that few people on this sort of contract will have any second thoughts about moving as and when they can improve their salary, conditions or location. But at the moment there are a lot of well qualified people who will do an excellent job for much less money than big-pharma used to have to pay.

  11. Anonymous says:

    Any port in a storm is a fine philosophy but, what message does it send when a experienced post doc earns less than almost every other graduate entry level career choice. The message it sends is that medicinal chemistry is a stupid career choice.

  12. PharmaHeretic says:

    More good news for chemists, this time from Teva.
    Teva Pharmaceutical Industries Limited (TEVA) to Sack 1,500 Cephalon, Inc. (CEPH) Workers

  13. Married to an Accountant says:

    #9, the differential is in accounting. There are fixed costs (buildings, full-time employees, etc..) which are accounted in one way. By hiring contractors your essentially saying “I can pull out of this at any time”, so I’ll decide to say those $$ don’t really count in my fixed costs.

  14. billswift says:

    >The message it sends is that medicinal chemistry is a stupid career choice.
    Or that medicinal chemists’ income had been inflated by unrealistic expectations. Hasn’t one of the recurrent themes/issues here been the reduced productivity of pharmaceutical research? If you want more money, you have to produce; if it is simply too inherently hard to produce, then your pay will go down until expected benefits balance.
    If you want more money than what an outsourced chemist makes, then you have to provide more benefit.

  15. anon the II says:

    I have a little bit of an inside view on this. Although they will almost certainly make less money, I think the AMRI chemists might do a better job. They’ll certainly attend fewer meetings.

  16. Hap says:

    For people in the business, and for wherever they’re hired (the cities that get their taxes), it’s better than nothing, and the companies get people working for less without having to negotiate problems across ten time zones. It is better than what was happening. It may work out for Lilly, but if the management is the same (and if no one is certain of the science), it probably won’t.
    In the long run, paying people less to do what they want will encourage more people in the US (and maybe elsewhere) to work in chemistry than paying people to be chemists elsewhere will, but at some point fewer people will decide to be chemists in the US because the inputs of time and work to get the degrees necessary to work in chemistry haven’t changed, only the pay. At some point in the not-too-distant future, the same companies will be complaining that there aren’t enough science graduates to fill their needs while hoping that 1) no one notices that those jobs aren’t paid well for their inputs, either here or elsewhere, and 2) their own pay indicates that if you want to make money, science isn’t the place to go. (People may not go into chemistry to get paid, but they do want other things from their lives, and if being a chemist limits their abilities to do those things, it will be harder to choose science as a career.)

  17. billswift says:

    >If you want more money than what an outsourced chemist makes, then you have to provide more benefit.
    I thought I better add that simply by being in the US you provide more value in one way – reliability. The effect of the floods in Thailand on the Hard Drive market shows one risk of outsourcing to a Third World country with lower levels of social capital.

  18. Anon III says:

    As an AMRI chemist, I’m not really sure what the mood is here. Personally, I’d rather see hiring here in Albany. Some good people I liked were laid off in the last couple years, though I don’t know how many are still around or would take the job if offered. I haven’t had a chance to talk with anyone in the nominally-affected department to see what they think.

  19. Hap says:

    14: True, but most careers don’t require 10-12 years of postgraduate education – lots of fixed costs and no money for them (or rarely) means no or few people doing them. As long as you have the whip hand, and there are people who have to work, you can do it – just don’t turn your back.
    Another part of the problem is that at least some of the problems are in management, but there doesn’t seem to be any requirement that management actually produce more to get paid. Management may not actually be able to solve its company’s problems (it can’t make their drug candidate not crash and burn in P3, for example), but if solving problems and not solving them only pays the same for upper management, how long do you think your hive will have any worker bees?

  20. Lu says:

    14. billswift
    Or that medicinal chemists’ income had been inflated by unrealistic expectations.

    Sir, what are the numbers you are talking about?

  21. milkshake says:

    Lilly sold an entire site in Greenfield, IN already in 2008, for a nominal cost, to a CRO called Covance. Then Lilly rehired its ex-employees as contractors via Covance and made long-term collaboration with this CRO. (I presume the management of both Covance and Lilly then rewarded themselves generous bonuses for pulling this neet trick).
    We don’t have to look to troubled big pharma companies – for example Vertex is doing great, and yet its management has been very keen on hiring short-term contactors both for process and medchem.
    “We do what we must because we can.”

  22. Nick K says:

    Chemists are treated like dirt, and always will be until the problem of the oversupply of PhD’s is solved.

  23. bbooooooya says:

    “Chemists are treated like dirt, and always will be until the problem of the oversupply of PhD’s is solved”
    Unfortunately solving the issue of chemistry PhD oversupply will take some time.
    VRTX is an example of the market crushing a company that is doing a lot of the right things. Incivek is looking to be one of the best drug launches in history (probably $1.5 to $2 billion next year, I get that there are some issues with sustainability), and the stock has been beaten like a rented mule since the drug was approved.

  24. jobber says:

    Several years ago, they laid off part of their PK Discovery group and then hired in-sourcing staff to do the same task. They eventually stopped it and recently sold the group to a CRO called Advion.

  25. R&Der says:

    I work at another company but have heard our senior management use in-sourcing out-sourcing rationale as a way to prevent stranded resources or to staff only to meet trough needs. I’ve even heard some say they may slow down (suspend) or restart projects and this gives them great flexibility. If they think any of these are going to be the difference between success and failure, we’re in trouble.

  26. R&Der says:

    I work at another company but have heard our senior management use in-sourcing out-sourcing rationale as a way to prevent stranded resources or to staff only to meet trough needs. I’ve even heard some say they may slow down (suspend) or restart projects and this gives them great flexibility. If they think any of these are going to be the difference between success and failure, we’re in trouble.

  27. Anonymous says:

    “Unfortunately solving the issue of chemistry PhD oversupply will take some time.”
    This problem will never be solved until our government stops offering training visas for sciences. They do this to solve our ‘horribe shortage of scientists’. Dangling H1B visas for chemists and other scientists will ensure that our salaries continue to fall.

  28. Student says:

    There is an oversupply of PhDs, like previously mentioned and the problem won’t be solved any time soon. Just a few weeks ago Congress held a committee meeting on this very topic and you had the Texas Instruments VP of Human Resources saying that there is a shortage of PhDs/Masters and that they can’t find enough of them… The video is on their site if you care to watch. Though you might break your keyboard in frustration.

  29. RealityCHK says:

    Interesting and encouraging that there is some hiring for med chemists. Over paid! I do not agree with it. Most of the med chem put more than 50-60 hr/week. The median salary of $85K/yr translates to around $30/hour. What you expect for a chemist who spent 5 yrs in Ph.D. and 5 yrs postdoc/job experience, should get? Minimum wages? Passion is good, however, one expects reasonable quality of life, true!
    At this point when economy is no good, anything is good, however, for long term, and especially for new graduates it is not a pretty picture.

  30. Anonymous says:

    And a 4 year B.A. in Business makes how much? Gee, could there be any correlation between their pay and the fact that government is not trying to oversupply them?

  31. anon says:

    Is it possible to please never use the term “on-shoring” again?

  32. pharmadude says:

    I had thought hiring on-site contractors to be standard for big pharma? AstraZ has been doing it for a long time, a large % of thier chemists are through a contract agency. The contract jobs aren’t bad and you do get experience from them. Much rather have a contract job than no job. The downside is that you can’t attend the company christmas parties (seriously, they won’t let you attend to avoid lawsuits). I don’t think the point of hiring contractors is to save $ in terms of wages. Rather, it allows the companies to remain flexible. If money gets tight and they have to get rid of the contractors its no big deal, no severance, and none of the shame of layoffs. This makes the regular empolyees feel safer in thier jobs. AZ could probably cut 1/3 of thier chemists without having to actually ‘layoff’ anyone.

  33. @12. PharmaHeretic says:

    Aw c’mon dude, why do have to be such a downer? Can’t you let us enjoy last week’s announcement from the politburo, oops I mean Bureau of Labor Statistics, that the unemployment rate dropped to the magical 9.0%? The labor situation for chemists can only get better from here!

  34. Anonymous says:

    Such a marginal cost saving measure for such a drastic cut in capability. The consulting groups who pitched this have no idea about drug discovery and assume a couple of individuals will make all the right decisions.
    I have never seen a better example of a team effort then a drug development program.

  35. RB Woodweird says:

    You load sixteen tons, what do you get
    Another day older and deeper in debt
    Saint Peter don’t you call me ’cause I can’t go
    I owe my soul to the company store
    Coal miners eventually got tired of being chattel. Chemists seemingly will never grow weary of thinking themselves above such concerns and will never have their United Bench Workers.

  36. Bbooooooya says:

    In the past I have thought the notion of a chemists union ridiculous. This may have been wrongheaded. Chemists do get treated like chattel, and a union may be a way to improve that. The possible downside, though, is a Reaganesque mass firing and mo ing opperations to chindussia.
    Is some type of union really achievable? What would it look like?? How would it function?

  37. London_chemist says:

    More short-termism. Using the example of post number one, the quality of a lot of the stuff produced by the contractors at Sandwich was appalling. Why should they make the extra effort–they just turned up, did the minimum and took the (low) pay.

  38. Ed says:

    Well #38, you pay peanuts, you get monkeys.

  39. andrewD says:

    Ed @39
    “They pretend to pay us, we pretend to work”

  40. Anonymous says:

    I’d heard recently through the grapevine that Lilly may be looking to re-evaluate their external sourcing due to some of their compounds ending up in a proprietary catalog of a foreign vendor.
    Anyone else hear about this?
    This in-sourcing strategy, along with contractors might be a way to help solve tricky IP issues, lower costs and even keep more chemists in the US employed, albeit at a lower wage.

  41. bbooooooya says:

    Wow. I thought that “right-sizing” was the best euphemism of all time, but apparently some morons from Mckinsey or BCG have really stepped it up. Well done!
    These guys are giving the ACS, who describe layoffs as an “Unexpected Employment Transition”, a run for the money.

  42. You're Pfizered says:

    Unless your former employer rounds you all up, forcibly puts you on a ship, sends you across the ocean, sells you to new owners to do back-breaking physical labor for no money at all, please stop comparing anything regarding employment here in the US to slavery.

  43. Todd says:

    I’ve seen this go on for years, but I see it’s starting to blow up more. I’m not in love with it, but if it means an actual job with actual experience you can take somewhere, I’d take it. I’ve heard for years that the big bugaboo that companies have are the benefits given to scientific personnel. If in-sourcing takes hold, that solves the benefits issue while not cutting salaries enough to scare potential employees off. Also, it does solve a lot of those big picture issues with outsourcing, like communication lag, transportation costs, regulatory affairs, IP, training up the future competition, etc.
    Oh, and as a descendent of slaves, shout out to #44. 🙂

  44. CMCguy says:

    #44/45 So shouldn’t believe comments about locked out NBA Players being treated like Plantation Workers?

  45. InfMP says:

    This is what I heard about AstraZeneca and OmegaChem in QC, CA

  46. anonymous says:

    Not my intent to insult anyone. Just think it disheartening that companies are treating us like property rather than people.

  47. anonymous says:

    Not my intent to insult anyone. Just think it disheartening that companies are treating us like property rather than people.

  48. bbooooooya says:

    “but if it means an actual job with actual experience you can take somewhere”
    Looking like only place you’ll be able to take this experience is another crappy ‘in-sourced’ job.
    “If in-sourcing takes hold, that solves the benefits issue” you left off the “for the company doing the contracting”. Someone will have to pay those benefits, and the most likely will be the employees.
    “in-sourcing” seems to me a pretty cynical way to do business. If LLY (or any other company) wants to pay their employees less and offer fewer benefits they should have the guts to do it themselves, and not hide behind some agency that chargers them a fee. It’s not like most of the employees are under contract or are not employed ‘at-will’. If the employees don’t like it, they can find a job somewhere else.
    If I were a shareholder of LLY, I’d be pissed off that they are wasting money paying AMRI something they should do themselves.

  49. Anonymous says:

    Correct. The Internet invites melodramatic comments. Saying something is like slavery, or comparing someone to a Nazi, or something similar, just dilutes the argument.
    At least no-one here ever uses all-caps. That IS a sin.

  50. pc says:

    Other industries already do this for a long time, though you may say that those have much less long term “research” component in it as compared to drug R&D. Another word to describe these folks, “embedded staff/employee”.

  51. Eli Lilly says:

    If I were a shareholder of LLY, I’d be pissed off that they are wasting money paying AMRI something they should do themselves.
    Are you kidding?
    The cost savings on 40 medicinal chemists working at a CRO price point versus the $250-300K/year for a Lilly FTE would be significant. Chances are some of these guys are ex-Lilly employees that were laid off over the last year or two.
    Which is worse, being a AMRI employee working along side Lilly chemists who you know are making a lot more than you are, or being the Lilly employee working along side a person doing a similar job for a lot less money, wondering when it will be you?

  52. Jon says:

    Can I still compare it to indentured servitude? Or maybe sharecropping?

  53. You're Pfizered says:

    As a medicinal chemist in pharma this scares me, but the fact that they are hiring US based scientists can’t be looked upon as a horrible thing over-all, and may go to the fact that outsourcing to foreign CROs isn’t going as swimmingly as the head honchos expected.
    The cost savings isn’t as great going this route, but you no longer have to worry about the logistics and IP issues you’d have working with CROs ex-US.
    They’ll probably have a few thousand chemists applying for those 40 positions.

  54. TX Raven says:

    So, is this happening to Biologists as well?
    If not, why?

  55. bbooooooya says:

    “The cost savings on 40 medicinal chemists working at a CRO price point versus the $250-300K/year for a Lilly FTE would be significant”
    Yes, I get the cost savings.
    My point is it’s cowardly and not in LLY shareholders best interest to pay AMRI a premium to do this. No reason LLY can’t cut salaries and benefits without paying AMRI a premium which should be going to shareholders.

  56. Anonymous says:

    This is the great race downward! Thanks globalization for giving me inexpensive chairs from China that I can sit on while I twiddle my thumbs with no job.
    There are not enough service jobs to support previous US middle class lifestyles. We will get paid less and less until things come to equilibrium. This is happening in every industy/job to varying degrees.

  57. You're Pfizered says:

    My point is it’s cowardly and not in LLY shareholders best interest to pay AMRI a premium to do this. No reason LLY can’t cut salaries and benefits without paying AMRI a premium which should be going to shareholders.
    If you cut salary and/or benefits, you run the risk of losing high performers to other companies. Even in a down economy there are folks who are very in demand. Lilly, or anyone for that matter isn’t going to risk potentially losing key people. What they do is look for ways to cut here and there, which includes outsourcing and layoffs. Layoffs hurt morale, but few key players are going to leave the company because of them. You start cutting salary and benefits across the board, people will.
    Besides, what’s the difference if this would have been 100 chemists in China versus 40 US-based medicinal chemists, probably all with pharma experience? Shareholders have no issue with companies going outside to hire cheaper labor.
    Lilly has been involved with AMRI since ~2000 when they first started exploring contract medicinal chemistry (AMRI and Array BioPharma were the first two companies Lilly worked with). Maybe after over 10 years of dealing with US and foreign based CROs, Lilly figured out that 40 chemists here are better than 100 plus in China, especially when you factor in being able to control the IP that’s being generated.
    Getting experienced talent at 1/3 to 1/2 the cost is a no-brainer, even for the shareholders.

  58. bbooooooya says:

    “You start cutting salary and benefits across the board, people will.”
    No reason cuts have to be across board. Companies cut deadwood (and those who aren’t good brown-nosers, but that’s a separate issue) in layoffs: can just as easily do it with salary. i.e. “well, your performance sucks, we’re cutting your salary by XX%”. 2 choices there, like it or lump it. Top performers (and good toadies) will always have have options to go to other companies.

  59. Botox says:

    It’s amusing Derek keeps posting these articles.
    A career for US chemists with a stable future and high pay is over.
    You guys sound dazed and confused, wandering through the rubble after the bombs gone off. It doesn’t matter why the bomb went off, the fact is it did.
    The new and 100% verified business model in America is that Asians and Indians will be given advanced degrees and a green card after attending US schools. There are no limits here due to the well established shortage of chemists.
    Salaries will continue to drop till they’re at the level of a Fed Ex employee.
    Until the water and air get as bad as China, there will always be someone who’s willing to come here to work as a chemist (at even minimum wage).
    Since the majority of the whiners on this site don’t believe in unionization of organizing in any way, I’m not sure why I hear all the histrionics.
    Walk to your fate quietly and don’t mind the thud in the back of your head where the cattle piston hits home.

  60. CR says:

    I agree with “You’re Pfizered” and find it is a bit amazing to see the comments regarding this obviously inflammatory article. Many of these same comments come up when it is announced that company X is moving their medicinal chemistry to China – how dare they? Damned if you do, damned if you don’t. We are only happy if things stay the same or keep growing. However, for that to happen, companies have to produce, which nobody can argue has not been happening lately.
    Lilly is now trying to “in-source, on-shore, or whatever you want to call it” and it is being trashed as well. I understand the loss of wages (and potentially benefits), however, if the choice is jobs going to China or staying here, I will choose them to stay here. In fact, this may be the way of the future – rather than having your external workers being external, why not have them on-site. The work can be more integrated and not have the lost time due to time changes, etc. I don’t find it appealing that these jobs are more than likely going to be sourced as a much lower pay; but we medicinal chemists have to wake up to the new world order. Unless we start our own company, we are somewhat beholden to these companies. I’m not sure a union would help, either.

  61. bad wolf says:

    @bbooooooya, botox: Unionizing is a great way to reward the unproductive and protect the deadwood. It is not surprising that it has not caught on with the more meritocratic research community, whether or not it would in fact deter job loss (hint: it probably wouldn’t).
    @Jon: i still prefer the term “coolie labor.” i don’t know why it hasn’t made a comeback yet.
    @pharmadude: “The downside is that you can’t attend the company christmas parties (seriously, they won’t let you attend to avoid lawsuits).” Thanks for the laugh of the day!

  62. Hap says:

    I don’t know whether the cuts are across the board or not matters. If the writing on the wall is clear (and it seems that it is), then the top performers will leave for someplace with either more employment options, better pay or benefits, or the opportunity to not be treated as an expendable cash cow for their managers. Brownnosing should be just as useful a skill in consulting, and probably gives its possessor more career flexibility at this point.
    I wonder what management will say when the drug tap runs dry. Maybe “Give us some more money and we’ll try something else while the people we trained eat your lunch and retirement”?

  63. My 0.02 says:

    It is all about the productivity. If in-house R&D staff can produce lipitor-like blockbusters hand over fist year after year, I am pretty certain that there will not be any discussion about outsourcing. Every other med chemist will be singing Kumbaya while holding a big fat check. But reality is that R&D labs at big pharma have not been producing. You really can’t fault management for doing what they have been trying/doing (under pressure from shareholders). The only way to get us out of the funk is one simple word “produce”. That will solve most, if not all, the problems.

  64. Hap says:

    But doesn’t that in part depend on management, too, both for determining where efforts are deployed and for how? The shifts in research deal with the lack of productivity of workers, but none of them deal with that of management (and even when management is dealt with, it is not often as punitively as for their employees).
    If the bus is being driven by the same people, and it’s not going where you want (and only slowly), changing the engine doesn’t solve the problem on its own. The differences in the penalties between employees and management for the same productivity differences bring “socialism for management and capitalism for their workers” to mind.

  65. Hap says:

    Also, I believe that (but don’t have a citation) while worker productivity has increased, neither compensation nor jobs for the economy as a whole haven’t – this seems to indicate that productivity isn’t behind everything, because industries with good productivity are layoff workers and cutting pay or benefits (with little change in management).

  66. bbooooooya says:

    “while worker productivity has increased, neither compensation nor jobs for the economy as a whole haven’t ”
    From what I found in quick search, US per capita GDP is up 30% since 2000 and per capital income is up 32%. Hours worked per year decreased by 3% in same time period. Not sure how that compares to EU, or what if distribution has changed.

  67. jack says:

    I agree. Globalization is killing the middle class. We are competing against unlimited, cheap labor. I remember the days when you could take your high school diploma, go to the factory in town, and support a family. Now you need to have a PhD for the privilege of being a temp.
    You’re right on. A stable and good paying job as a chemist is a thing of the past. Just simple supply and demand. Universities enjoy the cheap labor (grad students, post docs). Companies enjoy an endless supply of cheap, disposable labor. Unfortunately, this will be the way for any outsourceable profession.

  68. medchemistpast says:

    I got a PhD in medchem, 1973. Terrible year. Looked around, decided that chem specialty formulation made a lot of sense,so I “sold out”. Retired a multimillionaire in 1999, at 51. The trick here is to recognize that chemistry is a pluripotent background- up to you how you use it. Sure, I’d’a rather been a drug discovery guy- but the bucks were elsewhere, and so was I. Choose your priorities, and live with the choices.

  69. @62 bad wolf says:

    “@Jon: i still prefer the term ‘coolie labor.’ i don’t know why it hasn’t made a comeback yet.”
    “Sharecropper” and “Coolie labor” may be construed as racist by some. In this PC environment, it’s better to stick with inoffensive terms such as “contractor” or “fixed-term employee”. Anyway, at least the Lilly/AMRI venture is keeping jobs in the US.
    It would be more insulting if Lilly/AMRI sponsored foreign nationals to fill in these FTE positions. I don’t consider myself xenophobic, but perhaps there should be a moratorium on H1-Bs. I don’t buy Lechleiter’s well-publicized claims that the US is lacking qualified scientists or engineers. Can anyone legitimately claim that capable chemists and biologists can’t be found in a country of 310-320 million people?

  70. BCP says:

    Unions will never work for medicinal chemists, the job is too far removed from any financial consequence for the company – there’s no leverage. A chemistry team goes on strike – how long until it affects the bottom line for the company or its shareholders?

  71. Rock says:

    There is one reason companies do these type of outsourcing deals–future financial liability. It has a lot less to do with the current FTE costs. It is the future pension payments and more importantly (and ironically) health care coverage that they are trying to avoid. Why do you think all the cuts from pharma have come from the top of the scientific ranks? Sure they are paid more, but the real reason is to cut them now before they are eligible for full retirement and full healthcare. They learned well from the auto industry.

  72. Anonymous says:

    #64 My 0.02. Bang on. But don’t expect a warm reception to reality here

  73. Anonichemist says:

    There is a fundamental flaw with this new MBA logic of ‘outsourcing’ and ‘off-shoring’. Ideas such as capacity flexibility with temp. workers and externalizing risk are BENEFITS and INCREASE costs (maybe not entirely financial). How many smart people say, “I want more middlemen.”?

  74. Anonymous says:

    Agreed – most of management needs to be removed. Or we will keep going down the path we are on. There are lots of good projects scuttled because of political decision making, not scientific. And there are lots of bad projects being pushed forward to meet metrics. Its a lot easier to push a bad project along, than shepherd a viable project through the inevitable twists and turns towards launch. The organization will get the behaviors that are rewarded…

  75. barry says:

    There were decades within memory in which Merck, Pfizer and Lilly were among the most profitable and most admired corporations in America. Now the business model is WalMart. These people are not employees and have no expectation of a career in Lilly.

  76. microbiologist says:

    In response to 54, TX Raven: Yes, this happens in biology. I work in a medium-sized pharmaceutical company in a biology group of about 20 scientists, of whom 4 or 5 are “temps” (contract workers). Most of the temps have been in the department over a year and at least one over two years. It’s way easier to get approval to hire a temp than to open a new position, because of the flexibility. The department pays about the same as for a real employee, but the temp takes home less than the person at the next bench doing the same job – without vacation, sick leave, equity, 401k, etc. We hired these biologists one by one through a variety of agencies, so it’s not quite the same as laying off a group of people and hiring them back as a group through a contract agency. I have seen that happen in various places with janitorial staff, food service, and with much more skilled jobs such as information technology. Is there any way to fight this? I believe that several years ago, Microsoft lost a class action suit filed by the “permatemps” who had been working there for years.

  77. Anonymous says:

    @76 be careful what you are suggesting wrt your “fighting” question.
    After the wave in which I was laid off, prior to alerting the usual contractor bottom feeders (Kelly Scientific, Aerotek, etc.) about the newly created/converted contractor positions, a memo was circulated from on high that laid off employees were ineligible to apply for the contract positions. At least Lilly isn’t throwing that particular bit of salt onto the wound.

  78. UsedToDoScience says:

    Ummm…Hasn’t this been going on in other job functions in the industry for awhile? You know, that guy who takes care of your LCMS needs at ::insert big pharma name of choosing:: – he’s probably a Waters or Agilent employee.

  79. Doug Steinman says:

    Interesting to read all of these comments. The lack of respect for scientists in the pharma industry by pharma management has been evident for some time now and is unlikely to change anytime soon. I predict that pharma companies will continue to find ways to lower salaries for its scientists and to provide far inferior health care coverage and either no pension plan or one that is far less generous than what exists currently. I don’t know if that means more in-sourcing or more outsourcing or something else. Perhaps more companies will go the Abbott route and separate out their pharma operations. Robert Blake used to rail about the injustices foisted upon him by “the suits”. Perhaps the same sentiment applies to the way we scientists are treated by the MBA’s that run the companies for which we work ( or used to work ). I don’t think that a union is a viable solution and I don’t know that there will be a solution until there IS an actual shortage of scientists willing to work at any salary and under any conditions.

  80. Jack says:

    ” I don’t think that a union is a viable solution and I don’t know that there will be a solution until there IS an actual shortage of scientists willing to work at any salary and under any conditions.”
    Unfortunately, you will be waiting along time. If you combine the H1b problem and the outsourcing problem, you still have a couple of thousand resumes applying to any open position. Atleast that is what I found. If supply ever comes close to meeting demand, expect a new wave of H1bs to hit the market due to the “shortage of scientists”.

  81. Anonymous says:

    NOTE: I just saw the AMRI/LILLY med chem jobs posted on the wed. Should I apply???? I’m a med chemist with 15 yrs and 5 compounds in the clinic including one in phase III. OH YEAH, if you read the job description (SEE BELOW), looks to me like serious undervaluation of skills / abilities!! Can you say CHEM PLEBE?
    The bottom line is that they maybe looking for some schleps to make molecules for some questionable/INEPT managers who probably have no track record of accomplishment in drug discovery but survived the lilly layoffs based on some unknown metric, duhhh.
    AMRI is hiring Research Scientists and Senior Research Scientists to provide chemistry services at Lilly’s headquarters in Indianapolis, Indiana.
    The Senior Research Scientist is an expert synthetic organic chemist. The scientist’s principal responsibility is in the design, synthesis, purification and identification of chemical intermediates and target compounds. The scientist is expected to provide contributions to the chemical problems assigned. The scientist is self motivated and demonstrates initiative in responsibilities and always strives to do the job better.
    MAJOR DUTIES AND RESPONSIBILITIES include the following. Other duties may be assigned.
    1. Synthesize target compounds utilizing a blend of both classical and modern technology effectively.
    2. Modify reaction conditions in accord with visual observations to allow rapid, successful production of target compounds.
    3. Use a broad spectrum of practical laboratory skills as needed; including advanced methods of purification of solvents and reagents, running reactions under anhydrous and oxygen free conditions, and using advanced methods for isolation/purification of sensitive materials.
    4. Utilize all available techniques and analytical instrumentation for monitoring laboratory experiments and the analysis of products effectively.
    5. Organize work time so that several reactions are run concurrently. Use time efficiently to produce target compounds with investigation of side reactions being normally given low priority.
    6. Manage workload and time to enable the incumbent to perform multiple projects effectively, and ensure all necessary paperwork is completed on a timely basis.
    7. Recommend and implement methods to increase the quality of products and/or services.
    8. Adapt to changing priorities such that productivity is unaffected.
    9. Contribute suggestions to coworkers.
    10. Find new and better ways of performing job by challenging established procedures. Require minimal supervision, bring assignments to completion independently.
    11. Discuss routinely with supervisor the status of the assigned programs and potential problems.
    12. Communicate effectively in verbal and written form on research results, issues, and plans.
    13. Conduct literature searches for specific target compounds, structures related to the target compound, or to determine specific conditions for compounds and reactions. Keep abreast of current scientific literature and discuss new findings with colleagues.
    14. Contribute technically to the Company’s web site; seek opportunities to publish.
    15. Conduct laboratory operations in a safe manner. Maintain familiarity with the Chemical Hygiene Plan. Exhibit safety awareness and safe work practices.
    16. Follow responsible actions regarding chemical disposal. Maintain compliance with all regulations at the federal, state, and local levels.
    17. Participate in self-development activities and the training of others.
    18. Perform other related duties as may be reasonably assigned in the course of business.
    The Senior Research Scientist is expected to have a high level of proficiency and productivity.
    To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable

  82. Anonymous says:

    What? No mention of “applicants must supply salary expectations”? $15/hr?

  83. molecular architect says:

    When I started in this industry, back in 1984, my employer hired many temps through contract agencies. All of these, however, were at the technician level. Most had undergraduate degrees in chemistry, biology or medical technology and worked under the supervision of a permanent PhD/MS level scientist. I thought that their treatment then was unfair – very sad to see it happen now to the scientists.
    As an aside, the government (where I now work) has been increasingly relying on contractors since the Reagan era. Contractors greatly outnumber federal employees in most agencies. They generally make more money than the feds for whom they work and have their own management which you know cost additional. Why does the government do this even though it’s more costly and less efficient? The politicians can claim to have cut the number of federal workers, the government is not directly responsible for the contract employees’ benefits and retirement, and (in theory) entire programs can be cut without laying off employees (even though in reality, most of the contract employees spend their entire careers with the agency). It’s similar to the corporate world – the voters (shareholders) are duped into believing that contracting saves money and are too ignorant of the workplace realities to see the substantial costs due to lost efficiency and productivity.

  84. molecular architect says:

    Seems to be a bug with your blog. I clicked post once – got seven copies posted. Hope it doesn’t do the same with this one.

  85. Innovorich says:

    Salaries and benefits in CROs are not necessarily lower than those in “big pharma”. The cost reduction is partly because the FTEs have lower overhead costs, and mostly through having them as a flexible rather than a fixed resource – i.e. direct to projects.

  86. Inside says:

    I can’t say too much here, being an AMRI insider, but I will tell you that this isn’t going to be the shameful job opportunity that some of you seem to think. Yeah, AMRI employees aren’t trading in BMWs every other year, but CRO pay isn’t an insult, either. We do alright, and the job can still be just as rewarding for real collaborative programs.
    And the reason Lilly came back to AMRI was the track record from their previous half-decade of collaboration (referred to earlier)–at least one compound partially designed/developed by AMRI med chemists just cleared Phase II, so no more monkey comments, please? There’s already mutual respect for scientists coming from both sides.
    As for how it benefits Lilly financially, consider that they already have un-utilized labs that they are still paying overhead for. Why should they carry this and then pay for overhead at some CRO elsewhere? It’s not like they are putting millions of dollars into new lab space to do this. So you can imagine cost savings just in this part of the deal, and we’ll leave the salary part (only a percentage of the FTE charge) out of it for now.
    And yeah, this really COULD be the future CRO model if it works well. (Can you say pharma herd mentality?) I know it didn’t seem to work so well for the Peakdale folks working in Pfizer Sandwich (remember the C&E News article?), but that wasn’t a result of the model, it was the building closure. It has been mentioned that other Pharmas use contract employees all the time–the difference with this deal (six year commitment according to the press release) is the forty-plus folks all from the same contractor (a cohesiveness you won’t get from the same number of folks individually hired through Yoh or wherever).
    Any port in a storm? Damn straight! And the storm just seems to be growing worse, with scientists drowning or changing careers. Why not seek out a life raft and forget that it doesn’t entitle you to caviar and crackers.
    One last comment–if you believe that embedded scientists interacting with pharma employees works well and is cost-effective, what does that mean for the Asian CROs? I can tell you that I’ve heard some busines development folks from well-known Chinese CROs are already crapping the proverbial bricks.

  87. FindingZzero says:


  88. Interesting says:

    As a former Lilly chemist laid off in the great purge in 2010, I’m wondering how many former Lilly folks are available to be hired back. Dow AgroScience has picked up a bunch of them. Many folks have moved out of the area entirely. Others have taken jobs in other industries. And several folks don’t trust Lilly to be around for six years.
    That being said, there are a lot of displaced medicinal chemists out there so this will be a fairly attractive proposition. Provided that you are willing to move to Indianapolis. Cost of living is low but the state is pretty backwards from a social standpoint. Not a real attractive notion for anyone coming from one of the coasts.

  89. SavedByGrace says:

    I too left Lilly due to the 2010 layoffs after many years of service. I am not bitter with them and hope the best for them as a corporation and for the many colleagues of mine that remain there. I hope this model works for both Lilly and AMRI. Mostly I hope it works to put new, needed medicines on the pharmacy shelves. I chose to leave big pharma and pursue a career as a chemist in another discipline – at about 40% of what I was making at Lilly. Lilly had a great compensation package! To be honest, I feel better about myself at the end of the day now, a lot of my health problems have gone away and my family is enjoying me once again – there is a price to be paid to be successful in big pharma. I wish Lilly well and AMRI well in this adventure. But there is life after Lilly and it is good for me!

  90. Jim says:

    As another one of the reallocated chemists from 2010, I am not surprised by this. A friend of mine works in operations, and mentioned this to me, also stating, “you can return to Lilly, as a contractor, at close to the salary that you were making.” To that, I replied, “thanks, but no thanks.” I’ve successfully made a mid-career shift, and I now do what I love, for less than half of what I made at Lilly. Low stress, and not being subject to volatile chemicals all day have improved my health (as well as my senses of taste and smell). I’m actually quite happy to go to work in the morning, and I could not honestly say that when I used to work at Lilly.
    Albany Molecular seems to be a solid company. We had a collaboration with them several years ago that went pretty well.
    I hope that it works out for all involved.

  91. Anonymous says:

    “As for how it benefits Lilly financially, consider that they already have un-utilized labs that they are still paying overhead for. Why should they carry this and then pay for overhead at some CRO elsewhere?
    So why do they have empty labs??? Layoffs perhaps?? This all smells real bad to me! It could be worse…If they hire H1B’s from wherever to fill these positions, by-passing all the qualified US workers.

  92. Anonymous says:

    Isn’t it interesting that Lilly laid off 43 medicinal chemists but is having AMRI bring in 40. The ratio isn’t quite the same (more associates with the AMRI deal) but hardly a coincidence.

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