[This post is based on the editorial in the May issue – read here for the full text, available for free to all registered users. We welcome feedback on our editorials in the comments section below.]

Cuts in pharmaceutical R&D jobs might provide short-term improvements to the bottom line, but do not bode well for the industry in the long run.

Right now does not seem to be a good time to be a pharmaceutical researcher. In January and February this year some of the world’s biggest pharmaceutical companies seemed to be competing to see who could lay off the most staff. The background to all of this is the low numbers of compounds that the companies have in their pipelines and the soon-to-expire patents of their highest selling drugs. The drug companies’ response has been the same for several years — merge and try to make cost savings.

So where is the industry headed? Are we witnessing a wholesale restructuring of the way these companies perform research? For many years, the large pharma companies have been outsourcing parts of their R&D. It is often the same scientists who used to work directly for big pharma who now work at (and run) the contract research organisations.

Smaller salaries and less regulation are an easy way to cut costs. It is thus no surprise that the only part of GSK neuroscience research to survive the cuts is the neurodegeneration area based in Shanghai. Another option has been to in-license drugs developed by smaller companies. The approach is popular — it removes much of the risk from the early stages of development.

There seems to be a fundamental problem with either approach. Big pharma has always played a role as a training ground in medicinal chemistry. Furthermore, having experts within the company is absolutely necessary and taking part in ongoing research is a major part of that expertise. For evidence of the problems with in-licensing, one needs to look no further than the ongoing uncertainty over the GSK deal for Sirtris.

Big pharma and small start-up companies might have very different criteria for taking a drug candidate into clinical trials. Clinical trials are a costly venture and big pharma must see a reasonable chance of positive results before proceeding. For start-ups simply reaching this stage might be enough to bring in the buyers.

Whether this is a short-term lull in the industry, or whether it is a sign of things to come, it is important to consider what these vast numbers of trained chemists will now do. Governments worldwide repeat calls for more science graduates — and in many ways it’s not the new graduates who have the problem. The typical pharma job advert seeks a PhD graduate with 0-5 years of experience — so the really bad news is for those more experienced chemists who have just been laid off.

It would now seem to be a tough task to convince a potential graduate student that this industry is so attractive. Who would invest years of their life and a lot of money into gaining a graduate degree if it offered only five years of employment before forcing a complete career change?