Reporter Rachel Melcer has written a remarkable article in Sunday's St. Louis Post-Dispatch, detailing how pharmaceutical giant Pfizer's decision to move its chemistry services business abroad has had a harsh impact on several American companies.
Tripos, ArQule, and Discovery Partners International each had deals with Pfizer to provide software to support that company's drug discovery and research processes. Pfizer refused to renew these deals, causing the closure of Discovery Partners International (it was sold to a Belgian company); the closure of the chemistry services division of ArQule; and the financial hardship of Tripos, which is now seeking a buyer.
"It's almost a death by 1,000 cuts," said Tripos CEO John McAlister to the Post-Dispatch, adding that not just Pfizer but the entire U.S. pharmaceutical industry was tipping to foreign locations. "Each time, the prospect took its business to a less-costly labor venue either in Asia or Eastern Europe."
The pro-outsourcing logic here is that, in the short term, Pfizer and its peers can save money by sending business abroad, and that U.S. consumers will benefit via lowered drug prices. However, even if such a state of affairs obtains in the short term, what about the long term? Perusing the resumes of Tripos management, I found five PhDs (out of ten total executives) and hundreds of man-years of expertise in chemistry.
These talented folks are no longer in demand, since someone in India or elsewhere is willing to take on their work for slave wages.
If what befalls them befalls other companies, America will eventually be physically depopulated of people who are able to make a living as scientists, engineers, manufacturers, and knowledge workers.
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2 comments:
If anyone believes Pfizer or any other Co. be it pharma or otherwise that moving their production or anything else to Far east, most likely China or India or any low cost country there, would result in lower drug prices for consumers, would also believe in a deal buying the Brooklin bridge. Does anyone believe that NIKE $200.00 shoes shoul cost $1.000 but thanks to being made by child labor somewhere there, we are saving $800.00. Of course not. In USA they would cost them perhaps $100 to make and there $10. The retail price is the same so one does not have to be a rocket scientist to do this math.
Same will happen with pfizer and other big pharma. Viagra will still cost the "patients" the same but Pfizer's cost will drop to 10-15% of current. Again you do the math. Is Lou Dobbs the only one fighting this? Is our population and our politicians completely brain dead? Not hard to figure out.
Ps. Please do not admit this, phizer and others my start the business of organ harvest by transfer of Chinese experts to USA. Once you are brain dead, it's free for all.
So it's time to buy shares in Pharma then, seeing as EPS should rocket as the cost cuts feed through.
GSK are at it too - moving neuroscience Centre of Excellence to Singapore from Stevenage.
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