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Pharmaceutical Companies Outsourcing to CROs: More Highlights

After posting ( see here) on April 17 about outsourcing and CROs (Contract Research Organizations) by pharmaceutical companies there have been several other articles on the subject which will be shared in this post. Since my search firm, Clark Executive Search, specializes in recruiting scientists and doctors with PhD and MD degrees, I believe any information regarding employment issues such as outsourcing to a CRO is of importance to my readers and a recruiter like myself. Here are the links to the recent articles I have read on the subject:

1. Pfizer has been trying to reconfigure their R&D organization and like other big pharmaceutical companies have been outsourcing more and more of their functions to CROs. Recently Pfizer announced they will be outsourcing some of their clinical development to a CRO, or service provider, PAREXEL( see release here ) Mentioned in the article is the savings and greater efficiency of such an arrangement, but when companies shift their work to CROs this usually boils down to  a loss of jobs at the pharmaceutical companies involved. Of course what is a loss of jobs for one company is a gain at another since someone has to do the actual clinical trial work somewhere. The trouble for US workers is that employees overseas, such as in China, where salaries are much lower than in the US, will do much of the work.

2. Bayer also recently announced they are closing a manufacturing site and outsourcing the work to a contract manufacturer ( read here from Biospace ). In the process 540 people will lose their jobs while some employees will be allowed to relocate to other Bayer sites. However I have found that usually those offered new positions within the company are a fraction of the total laid off for several reasons. Many people simply cannot relocate due to family concerns. Often the relocation package is not that generous (by design?) which further discourages people from accepting a new position within the company. Some do not move to a new site because they have to apply for the job along with everyone else both inside and outside the company. It is rather humiliating to have to apply for a position along with everyone else at a company you have worked with for many years. The pharmaceutical companies count on all of these factors as limiting the actual number of people they have to retain, which of course helps their bottom line. It sounds great that they are offering jobs for the employees at new sites, but it really is more PR than reality as to how many get hired. One VP at a big pharmaceutical company told me only two people from his department were offered jobs at a new site.

3. Derek Lowe wrote a great post over at his blog, In the Pipeline, about the future of medicinal chemists at Pfizer and that pharmaceutical company’s chemistry outsourcing strategy.  Derek explains the new Pfizer model involving much of the bench chemistry being outsourced to a CRO in China, with some of the remaining chemists at Pfizer now relabeled “ drug designers”. There are a tremendous number of comments to his post by chemists and many are quite bitter, as is to be expected. These comments are definitely worth a read, but they will leave you feeling very pessimistic about the future of chemists working for pharmaceutical companies in the future.

4. Derek also has another post titled, “Extreme Outsourcing” ,about virtual companies with one or two employees and all work being outsourced to CROs. My search firm has recruited for several of these virtual companies. The candidates, who were reached about the positions for these companies, were of different minds. Some were excited to be able to work from their homes and not have to relocate. But others worried that they would miss walking down the hall to bounce ideas off fellow scientists.

4. Over at FierceBiotech there is another post about two CRO employees who allegedly falsified data while working on a Schering Plough clinical trial. They were fired; but it raises the question of whether pharmaceutical companies will lose control as more and more work shifts from in house to external partners. Are CRO employees as dedicated to the work of a pharma client as an internal pharma employee is to the same work?

As a last thought, I wonder if the CROs are taking advantage of the high quality US workers being laid off from pharmaceutical companies to beef up their operations with talent that would not normally be available to them? Has anyone heard of an up tick in employment at CROs as they acquire more and more of the outsourced work of pharmaceutical companies? I welcome any comments on the subject.

Update : March 23,2012: Article on virtual companies and outsourcing  

Update February 22. 2012: From PharmaTimes: ” Sanofi’s smarter R&D taps into explosion of external innovation

Update Nov 20,2011: Here is a related post on the subject