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Insight & Intelligence™ : Aug 1, 2012 ( )
Biopharma Job Outlook Bleak through Mid-Decade
Restructuring, Outsourcing, & Patent Expirations Have Combined to Create Tumultuous Job Market
After years of flying high, biopharma job growth is running into turbulence, as a number of factors have increasingly pushed big pharma into layoffs. Although the picture is bleak now, the industry’s longer-term employment prospects appear brighter.
Roche will eliminate 1,000 jobs by the end of 2013 when it shuts down its Nutley, NJ, R&D site. The company has said the shutdown reflects its shift from early- to later-stage R&D. Some of those staffers will be rehired when Roche opens a 240-employee clinical research center next year.
Earlier this year, Novartis said it would cut about 2,000 jobs nationwide, including 330 at its U.S. headquarters in East Hanover, NJ, in addition to 2,000 earlier European job cuts. The company blamed the coming September patent expiration of its top-selling blood-pressure drug Diovan, and slowing sales of another, Rasilez.
Already this year, according to a spot-check of announcements, AstraZeneca plans to shed 7,300 jobs worldwide; Takeda, 2,800 jobs, mostly in Europe; Abbott, 700 lab diagnostics and hospital division jobs in the U.S. and Puerto Rico; Merck Serono, 580 Swiss jobs. Last year Pfizer announced it would eliminate 16,300 jobs; Merck, up to 13,000 jobs.
All those planned layoffs come on top of the 7,987 biopharma layoffs planned between January and June of this year—significantly above the 4,771 reported during the first six months of 2011, according to the most recent Job-Cut Announcement Report by Challenger Gray & Christmas. According to that report, companies across the industry planned to cut 2,945 jobs last month, nearly triple the 1,082 jobs slated for elimination in June 2011.
While industry sales and marketing jobs have fluctuated based on needs, big pharma’s focus on chopping internal R&D is new but understandable given the expense of drug discovery.
In addition to outsourcing R&D activity to partners, pharmas have also outsourced R&D and manufacturing operations to China and other Asian nations, accounting for some layoffs. In its 15th Annual Global CEO Survey, released in January, PricewaterhouseCoopers found 43% of surveyed biopharma CEOs said they “outsourced a business process function” within the past 12 months, compared with 35% for all industries.
Small Firms Getting Bigger
Unlike big pharma, smaller biopharmas are expected to grow. “When we look at the pre-commercial or small commercial to mid-sized biotech companies, over half of them expect to grow, and that contrasts with about one-third of the larger companies expecting to grow,” Linda E. Amuso, president of Radford, told GEN. Radford is an Aon Hewitt company that provides compensation and other human resources consulting to clients in life sciences and other technologies.
Less than 5% of small- to mid-sized companies expect their staffing to decrease, compared with close to 15% of biopharma giants, according to Amuso.
At biopharma giants, restructuring has gone beyond layoffs, to picking up new compounds, new biotech companies, and new product franchises.
“So at the same time that they’re cutting, they are also adding staff to address underserviced areas, or where they need to add talent,” Amuso said.
Given industry restructuring, biopharma employment is unlikely to see the same growth it enjoyed the previous decade.
Between 2001 and 2010, the U.S. added more than 96,000 bioscience jobs—a 6.4% growth rate contrasting with an overall employment decline of 2.9% or more than 3 million jobs, according to the new biennial Statewide Bioscience Industry Development report, released by Battelle and the Biotechnology Industry Organization.
More than three-quarters of the industry job gain occurred in just five states that grew their life sciences workforces by more than 10,000 jobs during the period, as biopharma powerhouses California, North Carolina and Massachusetts joined up-and-comers Florida and Texas. But the report also showed a 1.4% dip in jobs from 2007–10, as the economy staggered into recession and sluggish recovery.
Big pharma’s contraction has sent thousands of workers scrambling for jobs at the smaller companies and research-based institutions likeliest to hire in coming years. Job competition for people entering biopharma is expected to be high through mid-decade, when the patent cliff ebbs enough for industry job gains to again exceed job losses.
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