Big Pharma’s Loss is Little Pharma’s Gain for Employees
By
11/3/2008

The constant stream of job cuts at large drug makers, including the latest round of layoffs at Merck & Co. Inc., is making Signum Biosciences’ search for new employees easier.

“It gives us leverage in terms of negotiating salary,” says Maxwell Stock, president and chief operating officer of the startup biopharmaceutical company based in Monmouth Junction. “If there’s a perception from a potential employee that things are tough [in the job market], the person will tend not to want to negotiate as hard as if the opposite was true. There’s also a wider range of talent out there.”

During the last few years, drug companies have trimmed tens of thousands of jobs worldwide, largely because they don’t have enough new medicines to replace blockbuster therapies that have lost patent protection, at which point they are copied and sold at lower prices by generic competitors.

Between cuts made since 2005 and the one announced last month, Whitehouse Station-based Merck is on track to shed 17,600 jobs around the globe by the end of 2011. Also last month, Swiss drug maker Novartis, which has its U.S. headquarters in East Hanover, said it will shrink its U.S. sales department by 550 workers. In April, Schering-Plough announced it would cut 10 percent of its 55,000 employees worldwide.

Smaller biopharmaceutical and specialty pharmaceutical companies in New Jersey are benefiting from Big Pharma’s downsizing, says David Poling, director of state business operations at staffing firm Aerotek. “It’s a great time for smaller drug companies to strike, in terms of the improving talent pool. It’s usually harder for them to pick up the clinical trial associates, the regulatory affairs managers and the drug safety people they need when the job market is hot.”

He says there’s been an uptick in supply recently of workers who are job hunting through Aerotek, whose clients include smaller firms and large companies.

Some of the newly unemployed may find themselves knocking on the door of Signum Biosciences, which plans to hire “four senior-level researchers over the next three or four months,” Stock says. The company, which has 28 employees, is using its home-grown technology to develop prescription drugs and consumer products for Alzheimer’s disease, Parkinson’s disease, diabetes, asthma and skin conditions.

Even some generic drug makers may covet the growing ranks of available talent, specifically those branching into branded-drug markets, which means the companies will need employees who have experience researching, developing and marketing therapies. Par Pharmaceutical of Woodcliff Lake last month said savings from firing 190 workers would help grow Strativa Pharmaceuticals, Par’s niche branded-products unit.

“If I’m a biopharma or specialty pharma company right now, I’m excited because I’ve got more employee prospects, and the ability to find partners with deeper pockets,” says Michael Steiner, head of the pharmaceutical group at wealth management firm RegentAtlantic Capital in Morristown, referring to Big Pharma’s penchant to license drugs from smaller companies with promising drugs under development.

But Steiner, whose clients include executives from Merck, Novartis and Johnson & Johnson, says employees at the bigger drug makers are “definitely nervous. They’re looking for reassurance of their financial security. They’re taking stock of their entire financial foundation.”

At the same time, there are “tons of opportunities as contractors with companies that provide support services to drug makers,” he says. “They’re looking to outsource manufacturing, research and development. There’s been a proliferation of CROs,” or contract research organizations. CROs, which provide clinical trial services to the pharmaceutical, biotech and medical device industries, in New Jersey include Covance and Advanced Biomedical Research.

Drug companies like outsourcing because there could be “a lot of down time between projects,” Steiner says. “You might pay more in the short term [for temporary workers], but you don’t have the overhead costs of permanent workers.” Stock says competition remains keen for highly specialized people.

But smaller firms have an ace up their sleeve, he says. “If you get 10,000 stock options at a strike price of $1, and the [privately held] company goes public at $10, your stock is now worth $100,000. That’s not likely to happen at a Big Pharma company.”

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