A Letter to Gray Davis

On February 23, 2011, I attended a symposium where both Gavin Newsom and Gray Davis were speaking.  Following the program, I had separate brief discussions with each.  These discussions were focused on the current state of the biotech/pharma industries - specifically related to continued trends in mergers, acquisitions, layoffs and site closures.  As both individuals spoke about their contributions to and support for the biotech/pharma industries in California, I was happy to have had those interactions.

In response to our conversation, Gray Davis asked me to send him an email regarding what is happening to scientists who were displaced by the ongoing industry contraction.  Below is the text of that email.

Dear Governor Davis,

It was a pleasure to meet you yesterday afternoon.  I enjoyed your talk and truly appreciate all you have done to build QB3 and related organizations.  Having served the biopharmaceutical industry for over 18 years, I can tell you with complete certainty that these efforts are making a difference in fostering the abilities of innovative scientists to create truly novel and beneficial technologies.  In following up with our discussion, I want to describe my perspective of the biopharmaceutical industry as it relates to mergers/acquisitions and employees.

Since receiving my PhD from MIT in 1992, I worked for four companies.  The first company, Glycomed, was purchased by Ligand Pharmaceuticals in a stock/stock transaction.  During the year following the merger, we experienced several rounds of layoffs followed by the complete closure of Glycomed in 1997.  In April of 1998, I joined COR Therapeutics.  Like Glycomed, COR merged with Millennium Pharmaceuticals and was subsequently closed in 2003. As the pattern of corporate activities were similar in the Glycomed and COR mergers, I felt I knew what to look for in times of transition.  So when Scios, my next employer, was purchased by Johnson & Johnson in 2003 in an all-cash transaction, I felt that this merger would be productive.  Unfortunately, in 2006, Johnson & Johnson elected to close Scios and lay off all of the 600 employees. Following a ten month period of consulting, I joined Intradigm Corporation as the Director of Synthetic Chemistry.  Yet again, this company was merged with another and subsequently shut down.

Governor Davis, it is clear that business decisions are driven by the needs of investors and shareholders.  However, in the currently contracting economy, there are not enough new companies forming to absorb the number of talented scientists left without work.  While many corporate recruiters are suggesting that the job climate is improving, in January of this year, layoffs were announced at Elan, Genentech, Kai and Exelixis.  These local events are in addition to many more in both biotech and large pharma that are almost regularly being announced.

Yesterday afternoon, you asked me to write to you regarding what happens to those impacted by corporate downsizings.  Sadly, while some move on to new companies, others remain unemployed for longer periods of time.  Still others choose to leave their professions in favor of alternatives leading to employment.  In the area of chemistry, Chemical and Engineering News recently stated that the unemployment rate for medicinal chemists is higher than any other chemistry discipline - a problem that cannot solely be blamed on outsourcing.  The amount of unutilized talent applicable to drug discovery and development is now truly staggering.

While investors are pushing for returns, big pharma and biotech companies are now trending towards increased development activities and de-emphasizing research.  The long-term results of this trend will include fewer new medications being approved.  The peak of this problem will begin to manifest itself in approximately 10-15 years - the end of the discovery/development cycle timeline for new projects initiated today.  As our population continues to age, significant markets are already established for which there are unmet medical needs.

Regarding the next generation, the current climate is having a significant impact on decisions to pursue education in the life sciences.  After all, if student do not see a future in this industry, what is their motivation?  Furthermore, the current climate is disruptive to families.  One specific example involves a friend of mine who was relocated by Roche, with his family, from California to New Jersey following the closure of Roche Palo Alto.  After only one year, Roche executed a corporate downsizing effectively stranding my friend and his family in an unfamiliar state with no income.

While the current economy is challenging, there is reason to be optimistic.  Advances in genetic sequencing are creating new opportunities likely to impact the future of healthcare.  One area in particular involves new paradigms bringing together novel therapeutic agents and companion diagnostics.  This approach of personalized medicine has the potential to determine which patient populations will respond to specific therapeutics.  While patient population sizes will be smaller, this paradigm opens the possibility for many more markets targeted to specific sub-populations. Therapeutics will be more effective and non-responders will be minimized.

While I cannot provide all of the answers in this email, I want to reiterate my interest in joining task forces where I can contribute to finding solutions for these difficult problems.  Please contact me at your convenience so that we can discuss this in greater detail.

Best wishes,

Dan

While political activities and policy development tend to take time to evolve, it has been over a year and a half since this letter was written.  To date, I have not received a response (or even an acknowledgement of receipt) from Governor Davis' office.  From Gavin Newsom's office, I was asked to review a new biotechnology policy platform scheduled to be rolled out during the summer of 2011. Even with my follow-up, I have yet to see any information regarding this new policy - even one year later.

To both Gray Davis and Gavin Newsom, biotechnology is a cornerstone industry in California.  It delivers hope to those suffering from ailments for which no cures exist.  It also continues to provide novel therapeutics effectively improving the quality of life for multitudes who, without this industry, would continue to suffer.

Biotechnology and pharmaceuticals are industries in transition. Opportunities now exist to influence the shape of new paradigms which will be applied to these industries.  Let's hope that the politicians at the center of this transition utilize the insight and experience of those who actively contribute to these industries.  As for me, I will be very happy to help.