BioPharm Executive: Firing Slows, but Lilly Fans the Flames

Published: Jul 29, 2010

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Firing Slows, but Lilly Fans the Flames

Could pharma layoffs finally be slowing down? That's what new data from Challenger, Gray & Christmas seems to suggest, with just 830 industry job losses recorded in June. That's a steep decline from the pace of prior months, which saw 34,987 pharmaceutical industry job losses year to date, or an average of 5,831 a month. Also encouraging is that the June figure continues a trend that goes back at least to April, when just 1,049 jobs, also well below the running average, were shed. In contrast, overall job losses across industries have actually ticked up slightly in the past couple months. (Hat tip to Phamalot for linking these stats.)

Of course, it will take more than two or three months to establish a meaningful trend, and as noted below, many pharma companies have announced planned layoffs that they haven't yet executed, so the bleeding is not going to end anytime soon. But it's certainly encouraging to see the numbers going down.

Still, contracting at a slower pace hardly seems to justify the media campaign Lilly that CEO John Lechleiter has undertaken recently in an effort to convince us that what we really need is more cheap foreign scientists. Huh?!

In a Wall Street Journal editorial and elsewhere, Lechleiter has taken up a familiar saw, bemoaning the U.S. education system for its failure to turn out new scientists at a high rate. "We've got to get serious about broad improvement in science and math instruction in our grade schools and high schools," he writes. I certainly have no problem with the sentiment he expresses, but his words might carry more weight if Lilly hadn't decided to axe 5,500 jobs last fall, having already made cuts that include research staff.

Now to be fair, Lilly hasn't pared down its workforce as sharply as many other pharmaceutical companies, and it looks as if most cuts will be concentrated on sales and marketing (only about 1,500 cuts of the planned 5,500 had been made as of April, according to the company.)

But read a little further on, and you'll see where Lechleiter is going: He wants more H1-B visas so he can staff up with cheaply paid foreign researchers. I imagine if Lilly put out want ads for research scientists, there would be no lack of qualified applicants.

Personally, I get the need for reform concerning foreign workers. In cases where there is a true imbalance between job supply and demand, as existed for many years in many kinds of manual labor, the current system has proven woefully inadequate. Employers trying to meet their needs end up employing illegal immigrants, creating a host of problems, and without sensible reform the alternative becomes the kind of police solution you're now seeing Arizona undertake--something I think is destructive to the fabric of society. And there are clearly problems with our current system of inviting highly skilled guest workers into our country and then giving them limited opportunities to become permanent residents, despite their huge contributions to U.S. innovation.

But if you want to make the case that our education system isn't meeting our demand for qualified research scientists, I can't imagine a worse spokesperson than a Big Pharma chief executive. For the long run, what he says about the need to increase our competitiveness is undoubtedly true. But the prescription so plainly defies current reality that it ends up laying bare other motives: It's not about qualified scientists, it's about costs. If Lechleiter wants to win this one, he'd be better off keeping quiet.

- Karl Thiel

Read the BioPharm Executive online newsletter July 2010.

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