Reuters Events | Pharma

Thought leadership and innovation for the Pharmaceutical Industry

Since 2007, approximately 80,000 pharmaceutical jobs have been eliminated.

Since 2007, approximately 80,000 pharmaceutical jobs have been eliminated. The recent consolidation in the industry, e.g., Merck-Schering, Pfizer-Wyeth and Roche-Genentech suggests that many more life sciences jobs will be lost over the next year or so. Typically, to avoid law suits and possible discrimination claims, most companies will layoff a mixture of experienced and entry level employees that cover the racial, religious and age spectra. For those of you who may not know, Americans who are 40 and older constitute a protected class of employees. In other words, companies that layoff employees cannot disproportionately give pink slips to employees 40 years of age or older. This law was enacted because older employees typically have higher salaries and have accrued more benefits and vacation time than their more junior counterparts and eliminating them can drastically cut costs. While most companies are careful to layoff a mixture of junior and senior employees during large layoffs, a quick perusal of the demographics of employees who lose their jobs reveals that many of them are older, more experienced workers. Sacrificing a few entry level employees (to prevent any red flags) is worth it to the accountants who charged with cutting costs and orchestrating large corporate layoffs.

Unlike consumer goods, pharmaceutical and biotechnology drug development is arcane, complex and may take up to 15 years to complete. There are many go or no go decisions that must be made during the drug development process. Typically, these decisions are rendered by experienced employees who have been down the road many times before and are able to recognize the oft-time nuanced attributes of successful drug candidates. Without the benefit of these employee and their experiences, drug companies may struggle to make the right decisions for new products being developed. Also, the loss of experienced employees can disrupt the flow of essential corporate knowledge to entry level and more junior employees. This is important because while most entry level and junior employees are academically and technically qualifiedit usually takes them years (under the tutelage of mentors and senior employees) to understand a companys best practices. Put simply, the unrelenting loss of experienced pharmaceutical workers can alter the standing or dominance of pharmaceutical companies in certain therapeutic areas. While massive layoffs of experienced pharmaceutical employees bolster drug stock prices in the short term, the long term effects of these layoffs on the overall health of the pharmaceutical industry remains uncertain.

Jeff Kindler, Pfizers CEO, mentioned yesterday during a CNBC interview, that eight Wyeth senior executives will keep their jobs after the Pfizer-Wyeth deal closes later this year. Not surprisingly, he failed to mention how many rank and file employees of the combined company would keep their jobs after the merger. Dont be shocked when Pfizer-Wyeth announces massive layoffs after the deal closesPfizers stock price has fallen 21% since it announced the Wyeth acquisition late last fall.

For more articles on the effects of downsizing on the life sciences industry please visit www.biojobblog.com.