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BioPharm Executive: Layoffs Haunt Biotech as Dust Settles After Shutdown


10/28/2013 3:07:01 PM

Some are axing jobs but others are hiring too! Check it out! (Isn't it tempting?)

October 30, 2013

At Least Government Employees Got Their Jobs Back

It's been a pretty productive month, considering that for much of the time the federal government wasn't operating. FDA churned out approvals--including three new chemical entities (see Rockville Files) despite the shutdown. That might seem to bolster some Republican arguments that this whole sequester/shutdown/default thing (insert your choice) isn't as serious as it's made out to be.

Moreover, the reason FDA could keep operating--the reason it kept 55% of its staff on the job, far more than most agencies, and an even higher percentage of those focused on drug approvals--is that these employees are paid for by user fees. The FDA has already been partially privatized! Tea Party rejoice!

I can't even get started on the moronic argument that we could have sailed past a default with no problem--that's something only someone who has never seen a cash flow statement could believe. Let's just thank goodness that we didn't default and hope that both sides of the aisle don't continue to think they are winning political points for this brinksmanship. There needs to be a loser in this game--other than the American people--otherwise it will go on indefinitely.

The effects of the sequester and now the 16-day government shutdown have been much more subtle. In the case of the sequester, for instance, it may take years to see how reductions in funding for the National Institutes of Health will manifest. In the case of the shutdown, at least, it is a crisis now past us and everything should return to normal.

Or maybe not quite. You know what happens if you take 16 days off work--the inbox piles up. Especially if all your colleagues were also on vacation. Steve Brozak and Anne Marie Noronha point out at Pharmalot that each day lost was probably more like two days thanks to the need to reschedule and reorganize. They suggest that future approvals may be slowed by the loss of support work on applications even though the agency kept pace with complete reviews.

Still, FDA fared better than agencies like the CDC and NIH. You can't just pick up again on, say, an experiment ruined by long delay. Much as with the sequester, the full effects of the shutdown won't be felt right away.

Give the government one thing, though: It takes 800,000 furloughed government workers to make pharma's job axe look comparatively blunt. Merck only announced 8,500 new job cuts, after all!

That, combined with 7,500 previously announced cuts, amounts to 20% of Merck's global workforce. The brunt, of course, will be felt by sales and R&D folks. The pharma giant is looking to shave off $2.5 billion in annual costs by 2015.

Pharma job cuts have been less in the news lately after the breakneck pace started to slow in 2011. But data from Challenger, Gray & Christmas suggest that we're really not much better off than we were a year ago. From January through August of this year, 8,793 job cuts were announced in the pharmaceutical industry--down only 9% from the 9,626 announced in the same time period last year. Moreover, their broader Health Care/Products category shows a major uptick--32,957 job cuts through August, versus 22,975 the year before. Merck's latest announcement is going to make 2013 worse than 2012 when it shows up in the data.

What makes this year different, fortunately, is that hiring has picked up, so net job losses are likely on the decline (although I don't have any hard data on that). That's comparatively good news if you're on the job market, but there's no doubt that the competition is fierce, and continuing cuts keep adding to the pool of job seekers.

In fact, PriceWaterhouseCoopers released a report early this year in which 72% of respondents (pharma and biotech execs) said they planned to increase R&D hiring in 2013. It's not clear if that level of expansion is going on--I don't think respondents are always honest with themselves or others when they answer these surveys--but it has certainly been a better time to find a job.

Unfortunately, that same report had 51% of respondents--more than any other industry--whining about how difficult it was to find qualified people. (That got some great commentary at the time). After you get over the breathtaking assertion that an industry that just laid off over 150,000 people can't find qualified folks to hire, there is something to be learned from this. Industry wants folks who don't just do the science but can manage outside R&D (ie all those researchers overseas doing the work for less pay) and navigate regulatory affairs. They also want people who somehow came up with these skill sets on their own rather so they don't have to bothering to train anyone or let them learn on the job.

If you're an out of work scientist right now, try to keep your skills sharp, but your best move may be to get some training in regulatory affairs or management. And to impress on interviewers that you're a quick on-the-job study. It'd be great to see more than just government workers returning to the job.

-Karl Thiel

Read the BioPharm Executive online newsletter October 30, 2013.

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