Drug industry jobs disappearing in N.J.
Companies say regulatory, patent issues driving hundreds of layoffs
One of several people at the Dover unemployment office last week from the pharmaceutical industry, David Stern worked for a small company when layoffs hit a few months ago and a manager called him into an office.
"You get that sinking feeling," Stern, 56, of Rockaway, said.
While looking for work, he has been volunteering as a counselor for others in the same predicament at the state Department of Labor's One-Stop Career Center. He said about one of every 10 workers he counsels for the center's Professional Services Group are from the pharmaceutical or health care industry in what appears to be a growing group of displaced workers.
A survey issued this past week detailed the pharmaceutical industry's impact on the New Jersey economy, saying the industry's positive impact was growing and companies had increased spending on research and development. But that same report, issued by the Healthcare Institute of New Jersey, a trade organization known as HINJ, also noted the industry had lost about 600 jobs, or about 1 percent of its work force, over the course of a year by the end of 2007.
Experts say the employment numbers are going to get worse -- with some large pharmaceutical companies announcing layoffs to offset anticipated declining profits as patents expire on drugs while they find it harder to get approval for new drugs. This year, pharmaceutical companies have informed the state Department of Labor about thousands of jobs to be cut in New Jersey.
"Our survey is a snapshot of the industry at the end of 2007," said Bill Healey, an executive vice president with HINJ. "Next year will be tougher."
Some pharmaceutical and health care companies with ties to Morris County, such as Pfizer, Novartis and Wyeth, are among those that have announced planned work force reductions. It remains unclear how much impact will be felt in Morris County. But, based on notices sent to the state this year, Morris will lose hundreds of pharmaceutical and health care product jobs over the next few months.
Johnson & Johnson officials informed the state in a letter last month that its manufacturing plant on Jefferson Road in Parsippany, which employs 296 people and makes Ben-Gay among other products, will be closed before the end of the year. The workers were told about the closing more than a year ago, said Chris Clark, a company spokesman.
The company purchased that plant a little more than a year ago as part of a larger acquisition of Pfizer's consumer products division, including four buildings in Morris Plains. One of those buildings never was completed and another remains vacant. Johnson & Johnson laid off about 350 workers there a year ago.
Abbott Laboratories has announced plans to close a manufacturing plant in Whippany where 134 people work by the end of this year. It also will close a Parsippany research facility with 83 employees by early next year.
The survey released this past week said that despite the loss of jobs last year, the overall payroll for members of HINJ increased slightly and the average annual compensation for workers came to a healthy $117,000. The industry's economic impact rose from $26 billion to more than $27 billion. And New Jersey companies spent $7.9 billion on research, $400 million more than the previous year.
"That's a significant investment toward future technologies and developing the next blockbuster drug," said Jeff Mraz, a partner with Deloitte & Touche, who was in charge of the survey.
Mraz said the survey indicated that the pharmaceutical industry remains strong -- although it also showed the first dip in employment since 2004. And it showed pharmaceutical companies spending less on capital projects, with new construction down by 18 percent.
Ramesh Agarwal, 66, of Randolph, had been working as an engineer with a company that designs facilities for pharmaceutical companies. He showed up at the unemployment office in Dover last week, saying he had been laid off earlier this month. He was told there was no work.
"They're not expanding anymore," he said of pharmaceutical companies, adding that he needs another job soon because his wife recently was told she is going to be laid off from her job, which is not in the pharmaceutical field.
Alison Thompson, 49, of Livingston also went to the unemployment office to get information on career training and tuition reimbursement. She worked until recently in customer services for Bradley Pharmaceuticals in Fairfield. Bradley was purchased by Nycomed, which informed the state earlier this year that it planned to close the Fairfield facility, where 196 people worked, and move some of those workers to a consolidated facility in Florham Park.
"I knew it was coming since April," Thompson said. "Before that, I had felt secure."
Stern said he just found a new job, months after being laid off from his quality assurance job for Elite Pharmaceuticals in Bergen County. He said his company had been talking about layoffs, but he was taken by surprise when he was among them. Some of the layoffs took place in the morning, and he still had a job in the afternoon.
"I thought I beat it because it was late," he said.
Healey said pharmaceutical companies have been hurt by "the regulatory climate," saying the Federal Drug Administration approved just 16 new drugs last year compared with 53 in one year a decade before. He also said some major drugs are about to go off patent and will be challenged by generic drugs.
The patent on Pfizer's anti-cholesterol drug Lipator, for example, reportedly expires in two years.
Those factors, Healey said, helped lead to a rash of layoff announcements.
He added that some companies -- such as Daiichi Sankyo, which has its U.S. headquarters in Parsippany -- have been growing.
Rich Salem, a spokesman for Daiichi Sankyo, said his company has doubled its sales force over the past two years, to 2,400, in preparation for the anticipated approval in September of a new anti-clotting drug for those who have had heart attacks, developed with Eli Lilly and Co. Sales for Daiichi Sankyo, which makes the blood pressure medication Benicar, increased 16 percent between 2006 and 2007 to exceed $1 billion, Salem said.
"Unlike some other companies, we don't face major patent expirations," he said, adding that none of the patents on his company's important drugs expire until 2014.
He and others in the field said it typically costs $1 billion to develop a drug and 10 years to bring it to market. With 20 years until a patent runs out, that means companies have about a decade to recoup their investments. Once drugs are challenged by generics, Healey said, they typically lose 90 percent of their market. And, according to other experts, about 95 percent of all drugs being developed never get to the marketplace.
"It's a highly risky venture," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick.
Hughes said that the pharmaceutical industry has been "relatively stable" over the past few years but that the expiration of patents and the failure to bring new drugs to market have combined to make the future uncertain.
"It looks like it could be very problematic," Hughes said. "If all those announcements (of layoffs) translate into layoffs, one of our key high-paying sectors is taking a major hit."
One of several people at the Dover unemployment office last week from the pharmaceutical industry, David Stern worked for a small company when layoffs hit a few months ago and a manager called him into an office.
"You get that sinking feeling," Stern, 56, of Rockaway, said.
While looking for work, he has been volunteering as a counselor for others in the same predicament at the state Department of Labor's One-Stop Career Center. He said about one of every 10 workers he counsels for the center's Professional Services Group are from the pharmaceutical or health care industry in what appears to be a growing group of displaced workers.
A survey issued this past week detailed the pharmaceutical industry's impact on the New Jersey economy, saying the industry's positive impact was growing and companies had increased spending on research and development. But that same report, issued by the Healthcare Institute of New Jersey, a trade organization known as HINJ, also noted the industry had lost about 600 jobs, or about 1 percent of its work force, over the course of a year by the end of 2007.
Experts say the employment numbers are going to get worse -- with some large pharmaceutical companies announcing layoffs to offset anticipated declining profits as patents expire on drugs while they find it harder to get approval for new drugs. This year, pharmaceutical companies have informed the state Department of Labor about thousands of jobs to be cut in New Jersey.
"Our survey is a snapshot of the industry at the end of 2007," said Bill Healey, an executive vice president with HINJ. "Next year will be tougher."
Some pharmaceutical and health care companies with ties to Morris County, such as Pfizer, Novartis and Wyeth, are among those that have announced planned work force reductions. It remains unclear how much impact will be felt in Morris County. But, based on notices sent to the state this year, Morris will lose hundreds of pharmaceutical and health care product jobs over the next few months.
Johnson & Johnson officials informed the state in a letter last month that its manufacturing plant on Jefferson Road in Parsippany, which employs 296 people and makes Ben-Gay among other products, will be closed before the end of the year. The workers were told about the closing more than a year ago, said Chris Clark, a company spokesman.
The company purchased that plant a little more than a year ago as part of a larger acquisition of Pfizer's consumer products division, including four buildings in Morris Plains. One of those buildings never was completed and another remains vacant. Johnson & Johnson laid off about 350 workers there a year ago.
Abbott Laboratories has announced plans to close a manufacturing plant in Whippany where 134 people work by the end of this year. It also will close a Parsippany research facility with 83 employees by early next year.
The survey released this past week said that despite the loss of jobs last year, the overall payroll for members of HINJ increased slightly and the average annual compensation for workers came to a healthy $117,000. The industry's economic impact rose from $26 billion to more than $27 billion. And New Jersey companies spent $7.9 billion on research, $400 million more than the previous year.
"That's a significant investment toward future technologies and developing the next blockbuster drug," said Jeff Mraz, a partner with Deloitte & Touche, who was in charge of the survey.
Mraz said the survey indicated that the pharmaceutical industry remains strong -- although it also showed the first dip in employment since 2004. And it showed pharmaceutical companies spending less on capital projects, with new construction down by 18 percent.
Ramesh Agarwal, 66, of Randolph, had been working as an engineer with a company that designs facilities for pharmaceutical companies. He showed up at the unemployment office in Dover last week, saying he had been laid off earlier this month. He was told there was no work.
"They're not expanding anymore," he said of pharmaceutical companies, adding that he needs another job soon because his wife recently was told she is going to be laid off from her job, which is not in the pharmaceutical field.
Alison Thompson, 49, of Livingston also went to the unemployment office to get information on career training and tuition reimbursement. She worked until recently in customer services for Bradley Pharmaceuticals in Fairfield. Bradley was purchased by Nycomed, which informed the state earlier this year that it planned to close the Fairfield facility, where 196 people worked, and move some of those workers to a consolidated facility in Florham Park.
"I knew it was coming since April," Thompson said. "Before that, I had felt secure."
Stern said he just found a new job, months after being laid off from his quality assurance job for Elite Pharmaceuticals in Bergen County. He said his company had been talking about layoffs, but he was taken by surprise when he was among them. Some of the layoffs took place in the morning, and he still had a job in the afternoon.
"I thought I beat it because it was late," he said.
Healey said pharmaceutical companies have been hurt by "the regulatory climate," saying the Federal Drug Administration approved just 16 new drugs last year compared with 53 in one year a decade before. He also said some major drugs are about to go off patent and will be challenged by generic drugs.
The patent on Pfizer's anti-cholesterol drug Lipator, for example, reportedly expires in two years.
Those factors, Healey said, helped lead to a rash of layoff announcements.
He added that some companies -- such as Daiichi Sankyo, which has its U.S. headquarters in Parsippany -- have been growing.
Rich Salem, a spokesman for Daiichi Sankyo, said his company has doubled its sales force over the past two years, to 2,400, in preparation for the anticipated approval in September of a new anti-clotting drug for those who have had heart attacks, developed with Eli Lilly and Co. Sales for Daiichi Sankyo, which makes the blood pressure medication Benicar, increased 16 percent between 2006 and 2007 to exceed $1 billion, Salem said.
"Unlike some other companies, we don't face major patent expirations," he said, adding that none of the patents on his company's important drugs expire until 2014.
He and others in the field said it typically costs $1 billion to develop a drug and 10 years to bring it to market. With 20 years until a patent runs out, that means companies have about a decade to recoup their investments. Once drugs are challenged by generics, Healey said, they typically lose 90 percent of their market. And, according to other experts, about 95 percent of all drugs being developed never get to the marketplace.
"It's a highly risky venture," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick.
Hughes said that the pharmaceutical industry has been "relatively stable" over the past few years but that the expiration of patents and the failure to bring new drugs to market have combined to make the future uncertain.
"It looks like it could be very problematic," Hughes said. "If all those announcements (of layoffs) translate into layoffs, one of our key high-paying sectors is taking a major hit."
Labels: Abbott Laboratories, Bradley Pharmaceuticals, Elite Pharmaceuticals, JandJ, layoffs, New Jersey, pharma
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