Two big mergers are now shaking out in the drug business: Pfizer/Wyeth and Merck/Schering-Plough. Employees at the latter have told me that they're still waiting for the cuts that they know have to come, but the Pfizer and Wyeth people are facing them right now. And the size and shape of those layoffs, and others around the industry, is not encouraging.
In chemistry, for example, which is my field, Pfizer started off with about 900 chemists. The Wyeth merger added about 350 more, but no one in either company expected the new entity to stick with a head count of 1250. After all, how do you make these mergers work -- if indeed you do -- without getting rid of people? But Pfizer's latest cuts appear to be taking the chemistry staff down to below the pre-merger level, which is unexpected.
One of the points of merging drug companies is supposed to be that you have more resources to bring to bear on the notoriously difficult business of drug discovery. So how does that work with fewer scientists? Pfizer's balancing that equation by outsourcing more routine work to contract scientists in China and India, who are almost certainly not included in those head counts.
This is a process that's been going on for several years now in the US pharmaceutical industry. Outsourced chemistry started as a way to augment a company's research growth plans. Then US-based scientists began to complain that companies weren't hiring as many people as they used to, because more work was being sent out. Recently, though, outsourcing has been used to actually cut staff, and the Pfizer merger is just the most dramatic example.