This week Albany Molecular (AMRI) announced job cuts in their New York facilities, at the same time they are hiring in their Singapore and Indian outposts. There was even a net gain in jobs, which is likely small consolation to those let go.
This is not a real surprise of course, as AMRI operate to provide cheap as possible chemical services and it is still a fact that such services are more economic in the far east and also eastern Europe: AMRI also have a site in Hungary. Though salaries are on the rise in parts of China, for example, there is still a significant gap, but that is not the only factor. AMRI commented in their press release that this was what their clients wanted, so it is not just AMRI moving their operation overseas, it has been requested that they give them chemical service from that area of the world. So not only the cheaper costs, pharma companies are looking to establish themselves in those growing markets.
It is not just AMRI that are doing this, pharmaceutical companies have laid off a lot of people in the last few years and have set up either sites in China or India or have agreements with companies based there. This is a process that will continue – increase even – before it gets better for western chemists, as start-up companies here work out how to best get customers to use the local talent rather than cheaper alternatives overseas. How they might do this is not straightforward; they might offer a specialist service that is either not offered or for which the data produced needs to be of high quality. Something further along the drug discovery process might apply here – for example lead optimization to overcome PK problems, although relying on keeping a lead here might end up being disasterous. Alternately they might act as an intermediary between the two continents, which might at least be a short-term solution for pharma that wants to make use of the cheaper costs but is worried about the potential pitfalls.
The evolution of the drug discovery business in the US and Europe is likely to be a painful process for those of us directly involved. But it will have to evolve, else a lot of trained drug discovery chermists will have to find a new way of making their living.