Monday, March 9, 2015

David Shaywitz: R&D jobs will become less stable - tant pis!

...Historically, transitioning from a large company to a startup might have been much more challenging for biotech R&D talent than for tech talent, given the geographical separation between pharma R&D (Pennsylvania/New Jersey) and startup/small company life science R&D (Cambridge or San Francisco). But with the increasing co-localization of large pharma R&D and life science startups/small companies in Cambridge and the Bay area, the transition from big pharma to startup becomes much easier, at least for the talent fortunate enough to live in one of these hotspots. 
Unfortunately, if not surprisingly, many but not all of the pharma R&D layoffs are occurring in places like North Carolina and Pennsylvania, where the life science startup landscape is extant (Durham-based Pharmasset, acquired by Gilead for about $11B, comes to mind) but comparatively limited. 
Two final thoughts:  
First, while many wonder if there’s a life science bubble, my sense is that while there’s clearly some frothiness (especially in areas like immuno-oncology), big pharmas continue to need promising products, and their shift to S&D means that they are unlikely to generate these internally. Hence, there will remain a durable market for promising life science startups, so long as there’s an attractive commercial market for pharmaceutical innovation (still true in the U.S., arguably not so much in many other places). 
Second, biopharma R&D talent need to adjust career expectations, and see themselves not as permanently affixed to a large pharma, but rather likely to work for a series of companies, offering a trajectory perhaps characterized by greater promise and interest, but less stability.
Here's my extremely uncharitable interpretation of Dr. Shaywitz's post and predictions:
  • Biopharma R&D talent needs to get used to lower salaries and benefits (because that's what happens with smaller firms, as opposed to larger ones) in exchange for potential large buyout-related sums. 
  • Biopharma R&D talent should not expect the luxury of a long, stable, single company career. 
  • If you're not living or ending up in either the Bay Area or Cambridge, you are screwed. 
As much as I dislike the completely unsympathetic nature of Dr. Shaywitz's  comments, I wish I could disagree with them. 

19 comments:

  1. Do you mean S&D or S&M (Sales & Marketing) shift?

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    1. I see Shaywitz meant S&D to indicate Search & Develop (new Drugs) as new pharma mode. However I think most pharma business types have adopted a Pfizer model of Search & Destroy with frequently little long term gain beyond possibly a single drug candidate where they might not screw up the development once have in their hands

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  2. Also, add to it that this is another driver between the difference of rich and poor. The faculty (presumably with the ideas) get the millions from selling the company (think of our friend David Sinclair at Harvard) but the scientists needed to develop the idea get a low salary and unemployment.

    Not good. For your average scientist you can kiss the American dream goodbye.

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  3. There was a lady in one of the big pharm giving a seminar on career in industry few weeks again. One of her main points was pharm job is not for life. Smart young people, better go to MD school or choose CS major. Or work in McD's, the min wage will be $15 with benefit soon.

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  4. hi there - agree with substance of your summary of my post but not of the tone; my view isn't at all "R&D folks are screwed so get used to it." Ask Michael Gilman as one example whether life at a biotech startup is worse or better than at a large pharma, or ask many other people who did this. I'd characterize the economic tradeoff as perhaps less salary but certainly more equity, so you truly have more skin in the game -- perhaps not for everyone, but I really like it (i'm at VC-backed genomics company in Bay area now and so this isn't hypothetical for me). As for the SF/Cambridge thing - obviously a generalization, and certainly not applicable to every individual. I do think some of the most exciting stuff in pharma R&D right now are in startups, and much of the action in Cambridge, a decent amount of SF, and certainly some occurring elsewhere eg Seattle, San Diego, etc.
    david

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    1. Mr Shaywitz I have been in pharma/biotech industry for more than 25 years where my career path largely matches the expectations you indicate Biopharma R&D talent need to adjust to. I might argue my salary has not been so drastically different because had to compete with other biotech and pharma to attract people (true for chemists, engineers and pharmacist, not clear if biology types have same) and more rapid promotions available to me.

      Although you probably are correct that is the current way of things I see at several major flaws with this approach that inhibit rather than encourage innovation over long term. The frequent break-up of Teams and general institutional knowledge results in greater inefficiency and missteps in both R&D stages. Who is going to be there to provide good due diligence and leadership in S&D mode if internal areas no longer are maintained. Additionally with that I wonder who will be around to train the next generations well enough to sustain and build R&D beyond immediate short term projects. This is especially evident when it comes to R&D people learning how to participate and handle the multidisciplinary interactions required to advance a drug, including interface with business elements and Sales & Marketing that can aid project economic viability questions that all is often foreign to many academic and start-up organizations. While the Pharma R&D does appear a broken model, mostly due to neglect or direct discounting IMO, but assumption that small companies can really fill the void would seem to be a temporary patch and not a sustainable R&D pipeline.

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    2. Great comment, and the only thing I disagree with is the "Mr" ;) Two important points you make are:
      1. Huge amount of tacit knowledge in large organizations that can get lost if contributors scattered (e.g. shocking to me, still, that Merck-Frosst was shuttered).
      2. Big pharmas responsible (at least historically) for a ton of training in pharmaceutical science writ large; without big pharma R&D, who will do this? lean and stressed-out startups? Perhaps not so likely...

      Presumably counter-argument is that different skills are now learned, such as gaining knowledge through working with external teams and collaborators, and there is now increased premium on one's own extended network.

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    3. I apologize as did not previously check your bio to realize you are a real Dr

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  5. Seems to me that life at biotech startups at the CEO/CMO level is equal or superior to life at the director/VP-level, say, at a major pharma company. I can buy that.

    However, I care more about the group leader/principal scientist-level and below. Are you suggesting that the economic payoff is there for them as well?

    As for Seattle/San Diego, not a chance. It's fairly clear that their loss over the last ten years has been Boston/SF's gain.

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    1. As an example from my last biotech, C-level hires got 200 to 300K options, compared to 20K for group leaders and 50 for VPs. DK how that compares to pharma options (I assume smaller #, but more tangible value). If you started at PCYC in Jan. 2013 you'll be doing better than someone who started at PFE at the same time. If you started at CLSN in Jan. 2013, well, less so.....

      Despite the three year old raging biotech bubble, odds are still stacked against little btechs ever amounting to anything.

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    2. Chemjobber,

      Look at a company like Agios, which was a start-up just a few years ago. The entry-level scientists from three or four years back are now directors, with experience and success (and certainly stock option $) that people who took "safe" jobs at big pharma just don't have. A rising tide lifts all boats.

      The caveat, of course, is that Agios uses CROs for a lot of their work. So the MS level chemist, who in the past may have been able to join and grow with an Agios-like company, never has a shot.

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  6. Probably are many variables - but - in general, most who join startups, at all levels, expect a measure of their compensation to be in equity; risky of course if company fails, as many do, but also upside far more significant than could ever be achieved by person working similar job at a big pharma.

    re: Seattle/San Diego - entirely agree efflux in direction of Cambridge/SF (as noted in my original piece), but still viable options in both places.

    i'd be interested in the viewpoint of mid-career colleagues (to your point about director/VP level) who have joined startups (after being in a large pharma) - perhaps they might have best view of how two experiences and compensation approaches compare...

    david

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    1. David: I do not consider the two following hypotheticals equivalent or even remotely equally desirable from a social perspective. Do you?

      Scenario A: Ten researchers earn $100,000 per year in a reasonably stable job

      Scenario B: One researcher earns $500,000, seven earn $70,000, one earns $10,000 at McWalmart, and the other is completely unemployed - and all or any of them could be unemployed tomorrow

      The move towards the latter is a decided negative for 9/10 people and the public at large.


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    2. Chad,
      I think we need to look back at this blog's STEM education threads and look at the supply side through David's lens. Scenario A is gone. Scenario B translates to: 1 + 7 stay in this profession and the other two "move on". Like, they should never have started in STEM. Eventually, the job pressure of 1 + 7 + 2 reduces to something like 1 + 6 and the pay may start creeping back up again.

      I am definitely not having fun writing this. It is that I have trouble turning away from reality of the current situation. Risking blasphemy I will quote W. Edwards Deming:
      It is not necessary to change. Survival is not mandatory.

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  7. Perhaps if we all lived in a one-dimensional world, the changes and risks would be great and worth it all. However, mid-career often coincides with a teenager at home. Moving is traumatic at this age. Wouldn't it be nice if we could work on truly interesting cutting edge projects AND not traumatize our children??? Its one thing to sell my own soul, quite another to sell my family's...This is the updated American individuality. Its not longer all about what is good for me and mine, but only what is good for me alone. Families are baggage at best and refuse at worst to most HR departments now. (Disclosure: I am American.)

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    1. Very important points - I actually discussed explicitly in context of tech/Silicon Valley view of work-life - have a look at this piece (but before despairing also check out the many thoughtful and varied comments): http://www.forbes.com/sites/davidshaywitz/2012/10/08/silicon-valley-work-life-balance-is-for-losers-not-closers/ . Again, for people living in Boston area, presumably less disruption (potentially) than in other places; really tough, eg. for folks in RTP or NY/PA corridor, now that both startups and big pharma R&D seems to be consolidating in Boston (and to lesser degree, SF).

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    2. @Davidshaywitz

      Re: "(Durham-based Pharmasset, acquired by Gilead for about $11B, comes to mind)"
      I'm pretty sure Pharmasset was based in Princeton, NJ and not Durham, NC. We shared the same pothole-ridden parking lot on College Road East. The 11 billion-dollar valuation was definitely not based on the facility itself. Interesting article though, if a bit provocative...

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  8. @Davidshaywitz

    Re: "(Durham-based Pharmasset, acquired by Gilead for about $11B, comes to mind)"
    I'm pretty sure Pharmasset was based in Princeton, NJ and not Durham, NC. We shared the same pothole-ridden parking lot on College Road East. The 11 billion-dollar valuation was definitely not based on the facility itself. Interesting article though, if a bit provocative...

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  9. Nicest information!!! I'll be enchanted to greatly help due to what I've learnt from here.Mr. Hugh

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