Trimming the Ranks

Recent pharma layoffs unlikely to have negative impact on drug discovery operations

Jeffrey Bouley
NEW YORK—Pfizer, based here, announced in January a series of cost-cutting initiatives, including restructuring efforts that will result in the elimination of some 10,000 jobs—roughly 10 percent of the company's global workforce. More recently, London-based AstraZeneca has said that it intends to eliminate 3,000 positions subject to consultations with works councils, trade unions and other employee representatives. In comparison to those two announcements, the recent news that San Diego-based Ligand Pharmaceuticals would lay off 267 people might seem insignificant—except that it represents about 76 percent of the workforce of the company, which discovers and develops drugs based on its gene transcription technology.
The question is, what does this mean for research and development, particularly in the arena of drug discovery? Not much negative impact overall, according to company reports and industry watchers.
"Obviously, eliminating 3,000 positions over three years globally will be felt across the whole organization," notes AstraZeneca spokesperson Emily Denney. "But it will have a positive impact on business moving forward. And for discovery, there should be no negative impact. The proposed layoffs are all in manufacturing, and we're actually working to streamline processes within R&D to increase speed and quality and reduce costs as well as continuing to improve our pipeline through externalization strategies—we've announced a number of new deals and collaborations recently."
Pfizer also seems to have no intention of cutting into discovery work, as it plans to continuing to invest in R&D, business development, emerging markets and new marketing approaches even as it saves between $1.5 billion and $2 billion by the end of 2008 as a result of its latest restructuring.
And even though it seems unlikely that Ligand could avoid negative impact on discovery work losing three-quarters of its staff, even it is offering a positive spin, with President and CEO John L. Higgins saying, "Ligand is rapidly transforming into a highly focused R&D and royalty driven pharmaceutical company. While it is difficult to let go of employees who have made significant contributions to Ligand over the years, this is a required move to help align our company's resources with our main projects."
Dr. Kenneth G. Krul, senior analyst with Kalorama Information agrees, generally, that discovery work is unlikely to feel many ripples from these layoffs.
"[Discovery] is the lifeblood of this industry and the only way anybody is going to get anyplace," he notes, though he adds that in Ligand's case, it could be a "death rattle."
He characterizes Ligand as having "more promises than production" so far and doubts the company has the resources to significantly affect its commercial potential, at least as a single business entity. But even so, discovery can survive these layoffs.
"You can ditch everything but R&D and hope to partner things out—essentially a rehash of what you did when you started the company," Krul suggests. "Sometimes that works."
As for Pfizer, he notes that while the company has many products coming off patent over the next five years and will "have to put a lot more money into clinicals and discovery/development to replace that," the company is far from dead.  "For example, it just moved to acquire Biorexis, which is focused on the Type 2 diabetes market, and Biorexis also has its own brand of development platform," Krul says. "AstraZeneca is economizing for similar reasons. The company, however, is putting $1 million into a new R&D facility; it's got some new cancer drug discoveries; it's buying Arrow Therapeutics for new viral technologies; and has just done a number of new licensing deals."
 

Jeffrey Bouley

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