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CROs to Benefit from Pharma Job Cuts

Wednesday, March 7, 2007 09:11 AM

German pharmaceutical company Bayer AG said recently it plans to cut 6,100 jobs in the wake of its acquisition of Schering AG last year. That’s the latest large layoff by a big pharma company that comes on the heels of a 10,000 employee reduction at Pfizer a month ago.

Both companies are also reworking their research and development strategies. Bayer will reveal its new strategy in June. Pfizer has already said it will improve productivity by consolidating research teams focused on a particular therapeutic area to one of four big sites. Currently, these research teams are at multiple locations around the world.

Who will benefit from these job cuts? It will likely be the companies that provide outsourced clinical research to pharma companies—big global contract research organizations (CROs), such as Quintiles, PPD, Covance,Parexel,PRA , ICON Clinical Research and PharmaNet.

 

 

They will do well because pharmaceutical companies still need to develop new drugs to fill the huge revenue gaps left when drugs go off-patent. Their only choice to get these drugs developed faster will be to sign up CROs, particularly the larger ones with global infrastructure to get the job done.

A note of caution is needed when pharma layoffs are prompted by a merger. Sometimes, a pharma merger results in delayed or canceled drug development projects that can make a CRO’s performance choppy in the short term.

But, in general, the pharma job cuts are a positive for global CROs that may also find the going a little easier recruiting employees in a tight worldwide clinical research labor market.

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