7-Business: Biotech bloodbath
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TITLE: Biotech bloodbath
SOURCE: The Scientist/BioMed Central, USA by Peg Brickley
DATE: Dec 30, 2002
------------------ archive: http://www.gene.ch/genet.html ------------------
Layoffs in 2002 left basic researchers reeling.
The recession-driven job crunch caught up to the high-flying biotechnology
industry during 2002, as company after company fired researchers in save-
the-firm "restructuring" moves.
CuraGen Corporation of New Haven, Connecticut and Exelixis of South San
Francisco announced their respective restructurings in early November,
joining dozens of former industry leaders that cut early-stage and pre-
clinical science researchers this year in a drive to get products on the
market before scarce cash ran out. The trend continued into December,
typified by Millennium Pharmaceuticals of Cambridge, Massachusetts, which
shed more than 100 preclinical research jobs, and Targeted Genetics of
Seattle, which warned half its staff that their jobs were likely to go as
the company shut down preclinical lines of inquiry.
CuraGen postponed the building of a research facility and cut 25 percent of
its staff, 128 jobs, most of them scientists who had been probing the human
genome for drug targets. Exelixis trimmed only 43 jobs out of 582 workers,
though the cuts were mostly in research.
Executives said the layoffs were normal evolution: having mined the genome,
they were now fashioning therapies from the glut of data.
"R&D is not dead. It has just moved closer to the patient," CuraGen CEO
Jonathan Rothberg told The Scientist . His company ends the year with about
$400 million in the bank, enough to run for four years without new capital.
In those four years, CuraGen hopes to hit the jackpot with genetically-
based tools or drugs. But Rothberg acknowledges that the young researchers
whose skills launched the biotech industry of the late 1990's are not
likely to be around to see that payday.
"When you have something new, whether it's the Internet or genomics,
experience is not an advantage," Rothberg said. "This company was built on
a lot of people right out of post-docs, but now the depth of experience has
to grow. While it is drive and intellect that allows you to decipher a
genome, it's experience that allows you to understand its implications for
Smaller biotech firms fell prey not just to the collapsing capital markets,
but also to the shrinking research objectives of large pharmaceutical
companies on whom they counted to fund late-stage clinical efforts and
"Some of these companies geared up for a lot of collaborations that did not
happen," said James Rosen, biotech analyst with New York investment bank
Brean Murray. "Unfortunately, when times get tough, the first thing to go
at large pharma companies is the R&D budget for outsourcing small projects."
Heads rolled at Exelixis days after it struck a drug discovery deal with
GlaxoSmithKline that brought $44 million in new cash to the biotech. But
the UK-based giant did not demand the heads of Exelixis scientists as the
price for the pact, said Exelixis spokeswoman Jane Green.
"We had been anticipating some sort of restructuring this year regardless
of business developments," Green told The Scientist. "The restructuring
would have been far more dramatic had we not been able to consummate this
Even Swiss agribusiness giant Syngenta cinched-in its basic research
capability. In December, Syngenta announced that it was pulling the plug on
the Torrey Mesa Research Institute in San Diego, a major contributor to the
mapping of the rice genome. The net job loss will be about 80, and includes
both scientists and non-scientists such as patent attorneys.
"Death is an unattractive alternative," said G. Steven Burrill, CEO of the
San Francisco life sciences merchant bank Burrill & Co. of the painful 2002
layoffs. But in consolation, he said that figures his firm has collected
show that biotech had cleared the decks for a brighter future, one that
will see $12 billion to $15 billion in new capital for the industry in 2003.
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