Is Drug R&D in Jeopardy?

Posted by: Michael Arndt on January 06, 2010

The U.S. drug industry, historically one of the most lavish spenders on research and development, ended 2009 with plans to eliminate a record 69,100 jobs. The toll is up 60% from 43,000 in 2008 and more than quadruple the 15,600 in 2004, according to outplacement outfit and layoff tracker Challenger, Gray & Christmas.

Understandably, plenty of scientists are going through the five stages of loss (or soon will be). But the cuts could help one group —outside labs.

Following its $68 billion acquisition of Wyeth, for example, Pfizer is closing 6 of the 20 R&D centers the two companies operated. Pfizer won’t disclose how many research employees will be axed, but analysts say the layoffs could essentially wipe out the bulk of Wyeth’s 6,000-person scientific staff, leaving Pfizer with the 10,000-member lab crew it had before the takeover.

Among other U.S. drugmakers dropping thousands from their payrolls: Johnson & Johnson, Merck, Eli Lilly.

The retrenchment isn’t limited to American companies. GlaxoSmithKline and Astra Zeneca, both headquarterd in London, reduced research staffs in 2009, as did Paris-based Sanofi-aventis.

The layoffs might not slow drug introductions, however, says Kenneth Kaitin, director of Tufts University’s Center for the Study of Drug Development. Increasingly, pharmaceutical companies are outsourcing R&D to universities and bioscience startups, which may have more expertise and work for less money. The recent job cuts will likely hasten more linkups to keep pipelines from running dry, he tells me.