Last week Merck & Co. announced that it would cut 7,200 jobs, following disappointing third quarter earnings, and Pfizer is rumored to be laying-off a number of people, including research and development staff, by the end of the year. Also south of the border Epix Pharmaceuticals, a Massachusetts-based small cap biotechnology firm currently conducting clinical trials for Alzheimer’s disease, announced plans to cut its workforce by 23%. Other small companies that have recently announced layoffs include BioCryst, MonoGen, Adventrx, Cell Genesys, and Maxygen. What does this mean for Canada?
Closer to home, Sembiosys, an Alberta-based company seeking to harvest insulin and other therapeutic proteins from safflower plants, announced that it had “implemented a substantial cost reduction program to conserve existing cash resources in order to extend its development runway in response to the current challenging capital markets environment.” The cost reductions included laying off 40% of the existing staff, which Sembiosys hopes will facilitate forthcoming milestones, thus better positioning the company’s two major development programs for future partnership.
In many cases, the companies have cut staff to focus on their lead programs, suggesting that there will be less R&D taking place as the U.S. and the rest of the world weathers an “economic downturn.” Long-term, this will result in a lower number of therapeutic candidates entering the development pipeline. Given the time it takes to develop and test a therapeutic, and depending on the severity of the pending recession, the full effects of this credit crisis on the biopharmaceutical industry may not be realized for 10 years or more.
At the risk of proselytizing, news like this underscores the need for programs like those found at MaRS. By providing resources, guidance and capital to early-stage companies in the life sciences, information technology, renewable energy, advanced materials and environmental sectors, the work done here will help mitigate the long-term effects of the current economic situation.