Issue Date: December 8, 2008
Life After Big Pharma
YANPING CHEN'S introduction to the new realities of big pharma life came last fall. A chemist with a doctorate from the State University of New York, Stony Brook, he was working in an entry-level Ph.D. position at Johnson & Johnson's chemical development labs in Raritan, N.J.
The site had become J&J's main U.S. development location after the closure of a similar facility in Spring House, Pa. Then, in September 2007, the company announced plans to end all chemical development in the U.S. J&J would close the Raritan lab and let its 35-plus employees go.
Chen began to assess his options. He wanted to stay in process chemistry, but he didn't want to leave the area because his wife was a chemist who also worked for a drug company in New Jersey. So Chen did what an increasing number of big pharma chemists are doing: He found a job at a contract research organization, or CRO.
As the leaders of major Western pharmaceutical companies struggle to hold on to the growth and profits they have enjoyed for decades, they are rethinking the way they conduct research. In many cases, this means deciding to close R&D labs where they invented or developed the blockbuster medicines that made them rich.
At Pfizer's Kalamazoo and Ann Arbor, Mich., facilities, home to storied drugs such as Lipitor and Lyrica, thousands of employees have been let go or transferred to other Pfizer sites, leaving ghost towns in their wake. Bayer's West Haven, Conn., chemistry labs were shuttered early last year. In Research Triangle Park, N.C., GlaxoSmithKline is laying off chemists and other scientists in waves as it revamps its research machine.
Chemists, especially Ph.D.s, traditionally have not had a hard time finding jobs. The last employment survey of American Chemical Society members, for the 12 months ending March 1, 2007, found that only 2.4% of members were unemployed or seeking employment, down from 3.0% in the previous year's survey (C&EN, March 3, page 37).
And the anecdotal evidence is that most chemists who have lost jobs in drug industry layoffs are finding work again. Some transfer to other labs run by their employers, others go to rival drugmakers, and still others join the small or start-up biotech companies that, more and more, are the source of big pharma's new products.
Those ending up at CROs—or launching their own—are finding a small-company environment that stands in sharp contrast to the corporate life they had become accustomed to. The pay is often lower, and the benefits are rarely as good. But CROs are gaining a new respectability in the scientific world, and the chemists interviewed by C&EN uniformly say they enjoy the entrepreneurial spirit that pervades them. Just as important, those who were bogged down by big company meetings and bureaucracy are returning to their first love: chemistry.
As for Chen, he ended up at J-Star Research, a midsize CRO in South Plainfield, N.J. It was started in 1996 by Andrew S. Thompson, a Ph.D. chemist who decided to leave Merck & Co. and set up his own pharmaceutical chemistry development shop.
The transition has been smooth, Chen says. At J-Star for about seven months now, he conducts route scouting and process development chemistry that is similar to the work he did at J&J. One big difference is the degree of contact he has with the people enlisting his services. "At J&J we got a deadline of several months or half a year," Chen says. "Now, we file weekly reports to the client."
Chen knew Thompson through chemistry contracts J-Star had completed for J&J. He landed the new job fairly quickly and without having to relocate his family. Not every chemist, however, finds work as readily, and many have had to move or make other sacrifices to stay employed.
IN 1995, John Perumattam, a chemist with a Ph.D. from the City University of New York, took a job with the San Francisco Bay Area biotechnology firm Scios. J&J acquired Scios in 2003, but the big company left its new business more or less alone, Perumattam recalls, and life in the lab seemed to continue normally.
Yet behind the scenes, change was afoot. "Slowly, after two or three years, they looked at our program and at their investment," he says. The hammer came down at the end of 2006. According to Perumattam, J&J decided to shutter the Scios facility and consolidate research at Alza, a nearby biotech firm that J&J had acquired in 2001. A few chemists and biologists were offered positions at Alza, but Perumattam wasn't one of them.
He looked for chemistry jobs in the Bay Area without any luck. He broadened his search and came across Seres Laboratories, a CRO about 80 miles north, in Santa Rosa, Calif. Headed by Mark Frishberg, a former Eastman Chemical research manager, Seres carries out process research, scale-up services, and small-scale manufacturing of pharmaceutical chemicals to current Good Manufacturing Practice (cGMP) standards.
On board for more than a year now, Perumattam says he enjoys working for Frishberg and David D. Wirth, Seres' director of laboratory operations and a former Eli Lilly & Co. chemist. The downside is he doesn't get paid quite as much as he did at Scios and has to commute two hours to get back to his wife and home in the Bay Area. Perumattam now stays in an apartment near Seres during the week.
Bill Smith is another chemist for whom a new job close to home wasn't easy to find. A New Jersey native who earned a Ph.D. at the University of Michigan, Ann Arbor, Smith had been working for GlaxoSmithKline in Research Triangle Park, N.C., for almost six years when rumors started to circulate in the fall of 2007 that layoffs were coming.
That December, company managers officially told employees that GSK was downsizing, and Smith got notice on Jan. 21. His family had put down roots, and he didn't want to leave North Carolina. But the only job offers he was getting were in places like Boston, Cleveland, and Albany, N.Y. "I was really at the end of my rope," he says.
Then, through a friend of a friend, Smith's r??sum?? landed on the desk of Robert K. Maddox, president of PharmaCore, a CRO based in High Point, N.C., about 60 miles from Research Triangle Park. Smith has been there for close to five months now as manager of chemical development, charged with bringing customers' molecules seamlessly from the lab into the pilot plant.
Brian Swierenga, vice president of GMP manufacturing at PharmaCore, is Smith's boss. Swierenga, who has been with PharmaCore for more than a year, came to the company from a 20-year career at Warner-Lambert and, following a 2000 acquisition, Pfizer.
A no-nonsense chemical engineer, Swierenga oversaw the construction of a $32 million pilot plant at Pfizer's Ann Arbor site. He started it up in October 2005 and ran it for about 18 months before Pfizer executives reversed course and decided to end chemical production there.
GIVEN HIS deep process development experience, Swierenga was in demand. He says he had job opportunities at other Pfizer locations and at small drug companies and contract manufacturing firms. PharmaCore was expanding, though, and Maddox was preparing to build a pilot plant similar to the one Swierenga was shutting down.
"I saw the chance to design and build a plant one more time," Swierenga says, "and to do it with more autonomy." The firm started construction on the site in May, and it is about 80% complete. PharmaCore's plan is to be manufacturing pharmaceutical chemicals early next year in reaction vessels as large as 500 gal.
At nine months, the job will have been completed in about half the time the Ann Arbor project took and, Swierenga estimates, at about one-third the cost. "For good reason, large pharmaceutical companies have a lot of infrastructure and oversight around big projects," he says. "In a lot of cases, it probably results in a better product, but it sounded fun to try it without all that."
Smith and Swierenga came along at just the right time, according to Maddox. PharmaCore had been growing steadily, and customers were asking the company to add large-scale vessels to the 100-L glass reactors it typically used. "If I were to invest in that kind of facility, I needed the best people to run it," Maddox says.
Big pharma's loss has been PharmaCore's gain—and its customers', too, Maddox adds. "There are so many people who have been laid off in the past year to 18 months that there's a real talent pool out there," he says. "When customers find out about the experience of our people, it gives them an immediate feeling of trust and competence."
Indeed, the know-how and intellectual firepower being let go by big pharma is impressive. In addition to lending their skills to existing CROs, laid-off chemists are starting their own companies.
ONE OF the better known examples is Kalexsyn, founded in 2003 by Dave C. Zimmermann and Robert C. Gadwood. Both are Ph.D. chemists who lost their jobs in Kalamazoo when Pfizer decided to end drug discovery at the Pharmacia site that it had just acquired there.
Kalexsyn has done well, according to Zimmerman, now the company's chief executive officer. In November 2007, it completed construction of a $5.5 million facility in Kalamazoo that he says is safer than the labs Pharmacia operated there. All equipment is under fume hoods, he notes, and each pair of chemists shares 26 sq ft of hood space, compared with just 8 sq ft at Pharmacia.
Today, Kalexsyn has 31 staff members, 22 of whom are scientists. All but one of the firm's original employees were former Pharmacia chemists, and Zimmermann says most current staffers are chemists who have been "displaced out of big pharma." In the past year, Kalexsyn has hired seven chemists who lost their jobs at Pfizer's Ann Arbor site.
Although Zimmermann doesn't wish layoffs on his fellow scientists, he is using the bad fortune to his firm's advantage. "We are in the luxurious position of being able to pick outstanding chemists," he says. When Kalexsyn posted two jobs on the ACS Careers website in June, he notes, 341 applications flooded in during the subsequent months.
The reputation of CROs is rising in the estimation of talented chemists, Zimmermann maintains. "When I was at Pharmacia, the mantra was that people not good enough to get jobs in large pharma went to CROs," he says. What's changed, he adds, is the evolution of CRO scientists from being just a pair of hands that back up a customer's in-house researchers to being an integral part of the drug discovery machinery.
Top academics are now encouraging their graduate students to become contract researchers, Zimmermann says. Kalexsyn recently hired a postdoc from Scott E. Denmark's lab at the University of Illinois, Urbana-Champaign, as well as a graduate student who studied at Ohio State University under Leo A. Paquette. And earlier this year, Kalexsyn lured Peter Wuts—a well-regarded process chemist who coauthored the book "Greene's Protecting Groups in Organic Synthesis"—while he worked at Pfizer's Groton, Conn., labs.
Kalexsyn's example has spurred at least one other team of ex-big-pharma chemists to start a CRO. After losing their jobs in Ann Arbor in 2005 during a first wave of layoffs, Pfizer chemists Helen T. Lee and Xue-min Cheng decided to form a company, AAPharmaSyn. "We knew chemistry and thought we could pick up the business knowledge along the way," Lee recalls.
Lee is the inventor or coinventor on 55 U.S. patents; Cheng is on 18 patents. And both chemists were involved in the development of Lipitor, the cholesterol-lowering drug that is Pfizer's best selling product. They convinced Gary L. Bolton, a colleague with his name on 13 patents, to leave his job at Pfizer and join them in launching the new firm.
In early 2006, they applied for $250,000 in start-up money from Michigan's 21st Century Jobs Fund and were pleasantly surprised to be awarded $750,000. "That really boosted our confidence," Lee recalls. By the end of the year, the company had attracted two customers: an unnamed East Coast biotech company and Ann Arbor-based QuatRx Pharmaceuticals, which was founded in 2001 to develop endocrine and cardiovascular therapies.
Lee, Cheng, and Bolton built up the company during 2007 by hiring Pfizer chemists who were victims of a new wave of layoffs in Ann Arbor. "We were fortunate to pick up folks who in many cases had more than 20 years of experience," Bolton says. "We had to turn down quite a lot of people—most of whom we knew well."
Today, AAPharmaSyn employs 10 people, all of whom are ex-Pfizer employees. According to Bolton, AAPharmaSyn has worked with about 22 customers to date, many of which were directed to the firm by former Pfizer colleagues. "We have a vast network of acquaintances who have scattered across the country and who have been an excellent source of business for us," he says.
Bolton and his colleagues claim the switch from the world's biggest drug company to working for themselves has been liberating. The irony is that, whereas big pharma was once regarded as a lifetime employment ticket for a chemist, today there seems to be more job security at CROs, which typically serve biotech firms rather than large drug companies.
"The stress is virtually gone," Bolton says of life at a small company. "The nature of this business is you can't see more than six months ahead at any given time, but that is not very stressful compared with what we came from. We had the constant threat of downsizing. How can you work in an environment like that?"
INDEED, the chemists contacted by C&EN seem to be happy in their new careers as contract researchers, even though some of them have had to take salary cuts or endure difficult commutes to get to their new jobs.
The AAPharmaSyn founders say their salaries are about 75% of what they once were. Likewise, Chen and Perumattam say they are earning a bit less at J-Star and Seres. Moreover, Pfizer had an excellent benefits package, Bolton acknowledges, and AAPharmaSyn is working to put something comparable in place for its staff.
PharmaCore's Smith says he's actually making more than he did at GSK, although his new retirement plan is not as generous. For him, the biggest sacrifice has been the 60-mile commute. He's considering renting a small apartment in High Point so he can stay local for two or three nights a week.
Despite being laid off, Smith isn't bitter toward his former employer. "They made me a better scientist, and they made me more professional," he says of GSK. In his view, the downsizing, while unfortunate, was carried out honestly and with care. "They went above and beyond what I think a lot of companies do," he says.
Although Smith is happy at PharmaCore, he says he misses his colleagues at GSK, plus some big company perks. For example, while conducting a dimethylamine addition recently, Smith had to improvise a valve adapter. "At GSK it would have been on the shelf and cleaned for me," he explains. The emphasis on safety is the same at both firms, he adds, but it was more explicitly codified at GSK. "Here, people do it more informally—by talking to each other," he says.
At Seres, Perumattam says he misses only a few aspects of his big pharma days. One is the interaction with the biologists and other nonchemists who tend to work at a larger research firm. Another is patenting new technology. Seres, like most CROs, assigns any intellectual property developed while working for a client to that client.
But that's not to say that good science doesn't happen at a CRO, Perumattam points out. "We are participating in high-level synthetic activities," he says. "It's exciting, even if we aren't getting patents."
Most important, Perumattam and his fellow ex-big-pharma chemists are happy to be employed with reasonable security and still doing chemistry. That's not something that all of their peers can say.
According to Chen, most of his former New Jersey colleagues have found new jobs—some elsewhere within J&J—and are doing well. Smith, on the other hand, says the situation in North Carolina isn't as sanguine; some of his former GSK colleagues continue to look for work, and the ones still employed must contend with the fear that they are next.
"The people who get let go sometimes do better than the people who survive," he observes. "Some of my friends at GSK sound both down and nervous."
Meanwhile, at AAPharmaSyn, Bolton and his colleagues say the uncertainties and frustrations of working at a company that is downsizing are all in the past. "The level of engagement and fun has increased dramatically. We enjoy working with each other, and we don't suffer from a lot of the bureaucratic processes that really kill people," Bolton says. "There is life after Pfizer."
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