MBA Job Outlook Dims

And the good news keeps on coming...

Good read.

Agreed, with a lack of many big blockbusters in the pipeline and lots of patent expirations over the next few years, big pharma is getting ready for some lean times ahead. Historically though, the industry is less affected by economic downturns than other industries.

To give people an idea of what's happening in big pharma, back in 2003 Pfizer (80K employees) acquired Pharmacia (60K employees) for $60B.

Fast-forward to 2009 and after 3 different sets of layoffs, Pfizer is now back to the size it was before it acquired Pharmacia (80K employees).

Pfizer just agreed to acquire Wyeth (50K employees). It wouldn't surprise me that 5 years down the road Pfizer is back to 80K employees again.

Big pharma is hurting big time. But then again, sometimes that's the best time to join. Who knows what the future will look like?

RF

part of that also has to do with Pfizer selling off its CPG division to J&J

Although you hit some really good points, looking purely at the employment numbers is kinda misleading.

For example:
Pfizer sold some parts of their business in the last 5 years - for example, they sold Pfizer's Consumer Healthcare Unit for $16.6 Billion to J&J.

Even accounting for the sale of the CPG group to J&J, big pharma has drastically reduced the size of their sales forces over the past 5 years. If I recall, other than post-merger elimination of redundant overhead, most of the headcount reductions were in this area.

Pfizer is a bit of a special case. It has struggled to integrate 2 big mergers (Warner-Lambert and Pharmacia) and it's pipeline has struggled to replace products coming off patent.

Well let me describe it this way. Before Pfizer purchased both Warner-Lambert and Pharmacia they had sites in Sandwich, UK, Groton, CT, NYC and Brooklyn. Since acquiring those companies, Pfizer has closed sites in:

Skokie, IL - old Searle site, entire building was sold off
Kalamazoo, MI - R&D HQ for Pharmacia, all R&D was eliminated, manufacturing remains
Ann Arbor, MI - R&D HQ for Warner Lambert, entire site (3500 people, mostly R&D) closed (and sold to UMich)
Peakpack, NJ - old Pharmacia HQ, sold to AT&T
Augusta, GA - Pfizer manufacturing site, closed
Nagoya, Japan - Pfizer's entire Japanese R&D operations were shutdown
Brooklyn, NY - original Pfizer manufacturing site closed

Of all the new facilities they acquired, they retained the biologics group in St Louis and the cancer group in San Diego. That's it. Very little of the companies that were acquired were retained.

Pfizer had peak revenues of almost $60B/yr. It's down to $52B now. Once Lipitor goes off patent (Nov 2011), they will lose another $11B/yr.

The Wyeth merger is an attempt to stem the bleeding. Based on what they've done in the past, they will take what's valuable from Wyeth (vaccines, biologics, animal health, consumer health) and eliminate the rest.

And Pfizer isn't alone. Here is the job loss tally for the last two years.

Pfizer - 10,000 jobs
AstraZeneca - 9,000 jobs
Merck - 8,400 jobs
Bayer - 6,100 jobs
Schering-Plough - 5,500 jobs
Johnson & Johnson, 5,475 jobs
Wyeth - 5,000 jobs
Bristol-Myers Squibb - 4,300 jobs
Novartis - 4,300 jobs
Glaxo - 3,710 jobs

Now don't get me wrong. I still think there are great opportunities for MBAs in the pharma business. The industry is going through a HUGE shake-up. The old model doesn't work anymore. Most companies are looking for salvation from biologics (companies like Biogen or Amgen), but it will be very rocky the next few years.

RF

refurb hits on some good points. However, it needs to be noted that due to the economic slump, the market value of several small and big pharma/bio-tech firms has dropped significantly making them sitting ducks for acquisition by desperate big pharmas trying to deflect attention from a barren pipeline (read Genentech and Roche somewhere between the lines). Even Merck, which traditionally relies on in-house R&D, has been talking up the acquisition game.

My gut feel is that the industry is positioned for a flurry of buy/sell transactions, thus needing more finance/BD type MBA hires in the near future. Marketing hiring could go down due to brand/pipeline consolidations due to the acquisitons. I am no John Mack, but I would be surprised if the scene plays out differently.

John Mack's replacement in training.

Nice analysis!

The part about the economic slump making acquisitions more attractive is very true. Pfizer purchased Wyeth for less than what Wyeth's stock price was last summer.

Considering the premiums a lot of companies have paid for acquisitions in the past, now is a great time to snatch up that company you've been eyeing.

RF

WSJ: Recruiting Drops at Business Schools

Career officials say this is the worst recruiting season they remember. In a survey by the MBA Career Services Council, an association of business-school career offices, 56% of business schools reported a significant decrease in recruiting this winter. Job-posting activity, usually robust in M.B.A. programs, is sluggish, with 70% of schools saying activity was down more than 10%.

https://online.wsj.com/article/SB1234143 ... lenews_wsj

I saw that this morning. Hopefully by the time we graduate things will start looking better...

I can't find the original thread, but Ross is reporting only a small decrease in students finding both internships and full-time employment (a 6% drop in both categories).

Ross MSJ

Much better than I thought it would be!

RF

Roche just commenced a cash tender offer (hostile takeover) for Genentech's remaining shares today. This was a very opportunistic move by Roche and I hope to God it doesn't go through. We'll see what happens in the weeks to come. Let's just say that the overall mood here in South San Francisco is NOT peachy-keen.

[sad face]

At the risk of turning this into a industry specific thread.....

I also hope for Genentech's sake that the deal doesn't go through.

What seems to be the current trend in pharma/biotech is that the successful companies get big, and in the process of transforming from biotech to mid-size pharma, they lose the culture that made them successful in the first place.

Then, in order to improve their sagging bottom line they purchase small biotechs. While integrating these biotechs, they destroy the culture that made them successful.

Lather. Rinse. Repeat.

RF

Well, think about this from Roche's perspective. Almost 50% of their revenues come from the Genentech biologics that they market outside North America. With Genentech in the bag, their balance cheet will look much sweeter. What will be interesting to see, if the bid goes through, is how Roche's non-American management structure will incorporate Genentech's very american leadership culture.

Like everyone else, I believe this deal will be disaster...

LOL. This thread has become pharma M&A discussion thread.

Watching the Crisis from B-School
"If the business world is changing, there is no better time to be where I am in this educational endeavor"

https://www.businessweek.com/bschools/co ... =rss_daily