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Betting on Biotech to Catalyze U.S. Job Growth? Don’t Count On It

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lasted for at least four to five years now.

I’m sure that the scarcity of biomedical research jobs is old news to any newly minted Ph.D. looking to break into the industry, or a veteran scientist who was recently laid off. Medicinal chemists in particular—the folks who design and tweak molecules to get the maximum safety and effectiveness out of a drug—have been hit particularly hard, as you can see from this site called “chemjobber.”

This week, a biotech CEO in Seattle told me he’s worried about what will happen to the 145 newly-laid off workers from Dendreon (NASDAQ: DNDN). In San Francisco, the job situation is hardly any better. Regis Kelly, the director of QB3, says many young biomedical scientists have found it extremely difficult to find gainful employment. The lack of opportunity has actually been a big reason why a number of young people have been trying to pursue their scientific dreams in startups. So far, about 280 young people have gone this high-risk/high-reward route over the past six years at QB3, Kelly says. No one can say how many of them will be successful, but you have to give these young scientists some credit for moxie. “They are creating their own jobs,” Kelly says.

But what is it like for established scientists out there looking in the biotech job market? To get some sense from an employee’s perspective, I called Steve Richards.

Richards got the bad news back in December 2010 that his employer, South San Francisco-based Exelixis (NASDAQ: EXEL), was essentially shutting down its new drug discovery operation to concentrate its resources on its most promising late-stage cancer drug candidate. That meant Richards and about 160 of his scientific colleagues were put on notice that their jobs were being cut. It was an especially troubling development for chemists, who have been hit hard by the trend toward companies using low-cost chemistry vendors in China, India, and elsewhere.

Despite the bad break, Richards clearly had a lot of things going for him. He has an undergraduate chemistry degree from Yale University, a Ph.D. in organic chemistry from one of the nation’s top programs at UC-Berkeley, and 10 years’ of industry experience at Abbott Laboratories and Exelixis. He lives in one of the world’s top two biotech clusters, where there are hundreds of companies that might benefit from his skills. He was savvy enough to build up his professional network on LinkedIn, and started showing up at industry events to get a better sense of where the industry (and the jobs) might be heading. He has a positive attitude, and a warm personality. I know because I met him more than a year ago at an event that I organized for Xconomy in San Francisco.

Even with all of those things going for him, it’s been tough to find work. Many small companies aren’t interested in hiring full-time drug discovery people, as they prefer to save money by using offshore vendors. Richards was fortunate to be able to stay at Exelixis until about two months ago, which gave him stable income and plenty of time for a deliberate search. Some former scientific colleagues at Exelixis have been able to stay with the company by transitioning into more development-oriented or project management roles, Richards says. But he estimates that fewer than half of those let go have been able to find comparable jobs at other biotech companies.

Steve Richards

Fortunately for Richards, things have been looking up for him lately. He recently latched on at UCSF, where he got a six-month temp job doing medicinal chemistry/drug delivery work for a lab focused on treatments for idiopathic pulmonary fibrosis. When we spoke Friday, he sounded jazzed about the new challenge and the opportunity to leverage the university’s network and resources to help him move on to another good opportunity when the project is done.

Optimistic as he is, Richards knows the odds aren’t great. When a good medicinal chemistry job comes open, Bay Area biotech employers often get “hundreds of resumes,” he says. Companies that have those rare openings often don’t have much in the way of human resources support to filter out the candidates. The recruiting process can be painfully long, especially in scheduling interviews with scientific managers. At one company Richards says he seriously considered, the interview process took four months.

“People are really particular about who they hire,” Richards says. “At a lot of companies, they are holding out for the perfect candidate.”

There are some reasons to think this grim situation won’t last forever. A recent string of FDA approvals has helped provide a positive spark for a number of companies in the Bay Area, Richards says. Some companies have begun to realize that offshoring may save money, but it also sometimes means a project takes more time, which negates a lot of the savings, Richards says. So, he says, some companies are starting to come around to the idea of having a few more terrific chemists on their staff. Maybe some will be even more motivated to hire some employees, especially when they see that a “perfect candidate” just took a job at a competitor down the road.

I hope Richards is right that things are starting to turn around for drug discovery professionals. Any industry that wants to thrive in the future needs to invest real money in people who come up with innovative new products. No doubt that biotech and pharma companies have wasted a lot of money on R&D in the past, but cutting to the bone hardly seems like the way to fill up an empty drug pipeline. Maybe these companies should seriously consider hiring some of those smart young innovators out of academia, rather than force them to take their best ideas into the startup world. If companies would just invest a little more in their scientific teams today, and put them in better positions to succeed, they might just have a whole lot more job openings in the future for people from all walks of life.

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  • http://pulse.yahoo.com/_FVPJSXDIC7TMMH2W6VZYNULQPM James P

    It’s the patent situation that’s adversely affecting the traditional pharma and biotech industries. Until we get a change in administrations, and perhaps, a trend towards “perma-patents” for future medicinals, few VCs are going to want to invest sums in industries where the economic life for their new products is only 5-7 years, after an investment of $1-2 billion in R&D, before generics rip off their developments with lower-priced products. For affirmation of this, just look at the comparative P/E ratios today for generic drug companies as compared to those for R&D-oriented drug and biotech firms.

  • BobW

    Biotech’s business model is not sustainable, as evidenced by its not sustaining! This is a modern buggy whip, and demanding a return to “the good old days” is a clarion call from the cemetery of bad ideas. The scale of the development process – millions of dollars at risk for a decade with only a limited duration for market protection – makes the investor risk irrational.

    The device development model includes risk reduction at a much faster pace, in small organizations where failure affects few jobs and few investors. The only feasible biotech model will be small and distributed idea generation, and rapid staging through clinical trials. Clinical trials must seek out optimal patient selection and relevant details of history and genomics. Patients, families and physicians must be allowed to accept greater rates of individual harm in the pursuit of better population outcomes. In short, highly sophisticated regulation is the only means to reduce cost, delay and harm in development of new therapies. Sophisticated regulation provides predictability, increasing innovation and profitability. Meanwhile, wishes for greater FDA staff funding, longer patent lives, more money from investors and big pharma are merely asking to get better results by doing more of what doesn’t work.

    Entrepreneurs and investors, acquirers and distributors, and patient advocates and clinicians each have unique needs and risks that can be melded into a single strategic plan for intellectually honest regulation. These several groups represent a constituency large enough and important enough to overcome the failed institutions of Congress, and affect sophisticated regulation within FDA.