Where are the jobs?

With companies cutting staff and outsourcing services, your job may be moving overseas; but then again, it may just be moving down the street

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It's easy to look at the growth in outsourcing as a path toward lost jobs. Pharma and biotech companies lay off staff, find people outside the company to do more of their research and development work, and thus, jobs are lost. But another way to see it is that while jobs are indeed lost to firms in other countries, sometimes outsourcing takes place without the borders of a nation, so some in R&D may find that they simply change companies, not careers.

Nigel Smart, managing partner and vice president of Smart Consulting Group LLC in West Chester, Pa., is one of those people who prefers to focus on the issue of "shifting" rather than thinking in terms of "loss."

"I don't want to sound like a crystal-ball gazer, but 20 years ago when I was in corporate research and development, I predicted that the research institute model of the time was on its way out and wasn't sustainable," says Smart, whose firm performs pharma and biotech consulting, in such areas as analytical quality control, quality assurance functions, regulatory/legal areas, process development, manufacturing, project management, facilities, validation and clinical trial management. "I had envisioned a shift toward market arrangements whereby the development of later stage candidates could occur through 'feeder companies.' That feeder concept didn't come about as envisioned, but you do see that companies have a much more pronounced focus on things like in-licensing and outsourcing now, and the old model really wasn't sustainable."

Smart says he views the pharma environment as dynamic and sees shifts to different types of jobs as pharmas begin to outsource R&D—and perhaps manufacturing as well—and focus more on their strengths of branding, commercializing and building market arrangements.

"I see legislation and regulation playing an ever bigger role in companies' futures and their bottom line, and so I see growth in the need for people who can do risk evaluation and risk mediation, as well as people who know how to navigate the regulatory issues that companies are facing," Smart says.

Though the specifics are different, his viewpoint is reasonably in line with that of others who see the glass as half full instead of half empty in recent years. For example, in Nature in June 2007, Mike Mortimer, executive vice president of global human resources at Quintiles Transnational in Durham, N.C., wrote, "If you are considering a career in clinical research, your timing could not be better. Pharmaceutical companies are increasingly opting to outsource clinical testing of potential new drugs. This shift is fuelling massive growth among the contract research organizations (CROs) engaged in doing the work—a trend that seems likely to continue for some time."

He saw this increased focus on outsourcing as creating a growing backlog of trials among some CROs, which translates into a need for more staff and had Quintiles looking at expanding its workforce by as many as 5,000 people over five years.

Smart says he doesn't worry about following the "current fashion statement" of complaining about jobs moving to places like India or China—at least not over the long run.

"I'm not sure that what they are doing in terms of such low costs is sustainable over the long run any more than what pharma did here for years was," he says. "Their costs are going to rise over time as they get more experienced and branch out more and workers demand higher pay and more benefits, and they are going to have to face rising regulatory demands from the U.S. Food and Drug Administration and European authorities for overseas manufacturing and trials."

Smart says he is bothered by how quickly some companies look overseas for opinions these days instead of looking more locally, perhaps in the cities where they are based, to tap the expertise of displaced professionals who may have moved into the consulting arena or might be encourage to do so, whether they are at firms like his or more solo-style operations.

"Sometimes they get picked up by smaller companies, and certainly we've picked up people in droves who were once clients and we've helped push them back into the market," Smart says. "But I do think the governments and the companies need to look at mechanisms that will help keep the people with all the technical knowledge we need in the marketplace and keep them active until age 65 or beyond because we need their knowledge instead of pushing them to other industries—and we need to encourage others to enter those fields and learn from those people, because we don't want to have to rely on companies outside our borders for expertise."

On the more pessimistic side, you'll find David Moskowitz, CEO of GenoMed, a small virtual pharma company that, as he says, "outsources just about everything." In his case, it's a necessity because of the dearth of venture capital money and other funds that would help him pay for such overhead, but as he looks at the larger pharma world, he sees the United States and Europe on a downhill run, with Asia and perhaps other areas ready to take over the lead in terms of output in discovery and development—and thus the ability to employ people.

"My feeling is that Big Pharma is just imploding," says Moskowitz, who was one of the distinguished speakers at the Pharma Outsourcing Congress held in early April this year in Munich, Germany. "The consolidation in the pharma industry has been going on at a rapid pace since the 1990s and with each new purchase—like Pfizer just both Wyeth and Merck just bought Schering—I'm not sure why they bother buying these other companies because they just seem to fire everyone right afterward."

As he sees it, the big companies in particular, and maybe some of the more mid-sized ones, too, are spending lots of money to get stuff like new pipelines or new technologies, but aren't spending any money on more useful things like long-term growth, survival and relevance. Nations outside the "first world" though, he says, are willing to work cheap and do what needs to be done to get the work and thus the jobs, Moskowitz says.

"The real entrepreneurship is overseas," Moskowitz maintains. "People have become too risk averse in the first world. So I think that ultimately, the third world is going to take over the lead in the pharma industry. They don't spend money on nonsense and they're more hungry and willing to take risks."

And, as Dr. Clifford S. Mintz wrote on BioJobBlog in 2008, "Until recently, many pharmaceutical companies were reluctant to outsource many critical R&D activities, e.g., screening, medicinal chemistry, pre-clinical testing, etc. for fear of inferior quality. However, the increasing costs of conducting US-based R&D coupled with a worldwide glut of American-trained, foreign scientists (who were unable or not permitted to find jobs in the US) has made the practice of outsourcing R&D operations less risky and more economically feasible. After all, many of the scientists who work in company-owned foreign research facilities or foreign-owned CROs were trained by American scientists who work at some of America's preeminent academic and government research institutions."

While he doesn't see much hope for the bulk of lost pharma jobs in the United States, Moskowitz does see hope for smaller companies like his, particularly virtual ones, because often, he can get quality work done overseas for free or nearly so, simply by offering those outsourced service providers a share in the intellectual property of his own products in discovery or development.

"It's really a funding-free model we've built, and kind of a starving pharma artist model, really, and I don't see many other people doing it," he says. "But there are companies overseas who are will to do work for free just to have a stake in something that looks promising."

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