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The Pharmalot Blog today reported that a Wall Street Journal article indicated that Pfizer is planning to cut $1.0 billion from its operating budget by 2012. As many of you may recall (especially those who lost their jobs) the world’s largest pharmaceutical company cut 1,100 earlier this year at its research facilities in Groton CT. The new cuts are aimed at reducing Pfizer’s R&D expenses by up to $2.9 billion annually.

The $1.0 billion in cuts is primarily aimed at reducing administrative and management duplications at Pfizer’s headquarters in NYC and worldwide. Other expenses to be trimmed include those related to promotions, travel, entertainment, consultants, print materials and supplies and electronic equipment. While there is no doubt that these cuts will help to control costs, I suspect that substantially more money could be saved if pharma executive salaries and bonuses were also trimmed.

While it is unclear what the additional $1.0 billion in cuts will have on scientists, I suspect it won’t be good. In case you have not noticed by now, Pfizer like many of its competitors are getting out of the R&D business. This means that R&D jobs will continue to dwindle and scientists will continue to struggle to find jobs in a highly competitive job market.

Since Pfizer purchased rival Wyeth Pharmaceuticals in 2009, the company has shed over 20,000 jobs. The reason for the job cuts and massive cost cutting measures at Pfizer is the loss of patent protection in 2012 for its top selling cholesterol medication Lipitor ($10.7 billion in sales) and its ED drug Viagra ($1.9 billion in sales). Last year Pfizer lost patent protection the antidepressant Effexor (peak sales of $3.8 billion) and the Alzheimer’s drug Aricept ($417 million in sales). Also, when mergers take place there is much overlap and duplication of effort that takes several years to sort out.

Don’t be surprised if new Pfizer job cuts are announced late next fall! Now, would be a good time for Pfizer scientists to remove the dust from their CVs; if it is not already too late!

Until next time...

Good Luck and Good Job Hunting!!!!!

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Recently, I have come across posts on blogs and websites reporting on lay offs and cost-cutting measures that are taking place at some biotechnology companies. A good example of this is a post that appeared yesterday on the Fierce Biotech Web Site. The headline read: “New round of layoffs, cost-cutting at biotechs.”  I thought “OMG this can’t be happening—not the biotechnology industry too!”

However, I am happy to report that many  of my concerns were assuaged after I read the post and realized that the reported downsizing was taking place at small companies, most of which were on shaky ground before the recession even began. Some of the companies that were mentioned included: Titan Pharmaceuticals, Pressure BioSciences, Insite Vision, WuXi PharmaTech Cayman and Targeted Genetics—not exactly titans (pardon the wordplay) of the biotechnology industry. 

There is no question that the current economic downturn will hurt some biotechnology companies (mostly because debt financing is so difficult to secure these days). That said, I think that the biotech industry may struggle a bit over the next couple of years but it will survive because it is in much better financial shape than most other American industries. 

It is important to note that the downsizing and cost-cutting taking place at many pharmaceutical companies is based almost exclusively on projected lost revenues that may occur 2-5 years two years from now—when many blockbusters drugs begin to lose patent protection— not on immediate cash concerns (most pharma companies have plenty of cash on hand). Pharma companies began downsizing in earnest about two years ago because they realized that they had gotten too big and their empty pipelines could no longer justify employing large numbers of unproductive employees. In my opinion, the current economic downturn provided pharmaceutical companies with a good excuse to continue to lay off employees, slash costs and maintain their stock prices. 

Many of the companies mentioned in the Fierce Biotech post have been around for 5-10 years and haven’t been profitable since their inception. As a former business partner once said to me “You don’t really have a business unless you have a product to sell and are profitable.” I suspect that many of these so-called biotechnology “companies” will go out of business—not because of the recession—but because they were unable to develop financially-viable products or services.

 Until next time…  

 Good Luck and Good Job Hunting!!!!!

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