The variety of woes afflicting Big Pharma have led to a spate of well-publicized layoffs, mostly among sales forces — 42,000 since the beginning of 2007, according to one count. Yesterday, Cole Werber at the In Vivo Blog highlighted yet another foreboding statistic: Drugmakers are also starting to trim R&D jobs.
Werber implies that pharma is starting to eat its seed corn, since less R&D means fewer opportunities to discover new drugs. In fact, though, the situation is almost certainly less dire than he suggests, since the industry is most likely outsourcing more of its research effort to contractors and cheaper overseas facilities. What’s more, there’s also still plenty of fat in drugmakers’ R&D budgets, particularly among post-approval clinical studies that serve more as marketing tools than any sort of advance for medical knowledge. So if the drug companies are smart — something of a stretch, I’ll admit — even an overall decline in R&D wouldn’t necessarily jeopardize drug discovery.
The R&D cuts so far are small, although they also predate the industry’s most recent problems. According to the just-released Pharmaceutical Industry Profile 2008 (PDF link), put out by the trade group PhRMA, the number of people employed in pharma’s U.S. research operations fell by 3,221 in 2006, the most recent year for which data is available. That’s a 3.9 percent drop compared to total 2005 R&D employment of 83,077, and represents the industry’s smallest science payroll since 2003.
To get a better sense of what this looks like, I put together a chart on recent R&D employment trends (click for a larger version) — although I should note that the industry doesn’t make it particularly easy to track these trends. PhRMA’s Web site only links to its most recent industry profile, which in turn only contains R&D job data for 2006. Older reports are still available on the association’s site, although you have to dig them out via Google.
The thing to remember, though, is that PhRMA only reports details on the U.S. research workforce. With no good data on global R&D jobs, then, the next best read on the drug industry’s R&D efforts is overall spending — which, it turns out, continued to grow at a good clip even while U.S. headcount shrank. Here’s a companion chart (again, click for a larger version), which shows 2006 research expenditures rising nine percent over 2005, to $43.4 billion. Domestic R&D spending rose even faster, jumping 11.3 percent to $34.5 billion in 2006.
Werber also frets that pharma is disproportionately cutting clinical-trial overseers and other support personnel who handle the FDA approval process and so-called phase IV studies — a bad move, in his view, given the FDA’s new emphasis on drug safety and the need for better and more extensive monitoring of drugs once they’re approved.
Here, Werber may well be right, although not necessarily. Trimming approval staff actually makes a twisted kind of sense, given how quickly the number of new drug approvals has fallen in recent years. (Employment in the approval category has fallen steadily since 2003, probably for exactly that reason.)
As for phase IV post-approval studies, it’s worth bearing in mind that many such clinical trials — possibly most — aren’t particularly rigorous in the first place. Pharma is notorious, in fact, for conducting small, uncontrolled phase IV trials that are virtually worthless in a medical sense, but which can lead to scientific publications drugs reps can then use as talking points with doctors. Should “phase IV” job cuts lead to fewer of those studies, we’d all be better off.
To be fair, early signs are that 2007 was a lot worse on the R&D front than 2006. Overall research spending grew just 2.5 percent — the smallest increase since at least 1971. (Non-U.S. spending didn’t come close to picking up the slack, either; it rose more slowly than domestic R&D.) Werber also points some well-publicized R&D contractions last year, such as Pfizer’s decision to close its Parke-Davis research facility in Ann Arbor, Mich.
So things may indeed get a lot grimmer before they get better, although it doesn’t have to be a disaster for pharmaceutical research. That’s up to the industry’s honchos to decide.
(Sources for both charts: Pharmaceutical Industry Profile, 2004 edition; 2005 edition; 2006 edition; 2007 edition; 2008 edition)
