Bio-Pharma R&D Jobs At Risk, CRO’s Licking Their Chops
There have been two very interesting news bits today in research and development in drug and bio-health companies. The ramifications are also rather scary if you have been monitoring this segment over the last few years as one of the few havens in high-pay medical and bio-health jobs.
- Today the WSJ reported that GlaxoSmithkline (NYSE: GSK) informed employees that the drug giant may cut 850 jobs in R&D, or about 6% of that segment as part of its ongoing cost cutting measures.
- Pfizer (NYSE: PFE) is also cutting R&D. It is abandoning its early-stage work in heart disease, and is dropping research projects in obesity and bone density, but seeks for partners to carry on the work. The company is targeting 15-20 regulatory submissions in the period 2010-2012.
In the very recent past we have noted how Eli Lilly & CO. (NYSE: LLY) signed an agreement with contract research organization Covance Inc. (NYSE: CVD) in a transformation of Lilly’s current R&D model.
This may be bad for new-hire wages in the R&D arena in the biohealth sector. This all may bode well for all of the medical and bio-health contract research organization (CRO’s). Here are some stocks with CRO as their main operations or with significant exposure:
- Charles River Laboratories International Inc. (NYSE: CRL)
- Covance Inc. (NYSE: CVD)
- Parexel International Corp. (NASDAQ: PRXL)
- Pharmaceutical Product Development Inc. (NASDAQ: PPDI)
- PharmaNet Development Group Inc. (NASDAQ: PDGI)
Between this wave of cutting R&D personnel and the flood of biotech mergers, it looks as though things are changing wildly in R&D.
Jon C. Ogg
September 30, 2008