Posts Tagged ‘Biotechnology Industry Organization’

Leaders in Pharmaceutical Intelligence Presentation at The Life Sciences Collaborative

Curator: Stephen J. Williams, Ph.D. Website Analytics: Adam Sonnenberg, BSc Leaders in Pharmaceutical Intelligence presented their ongoing efforts to develop an open-access scientific and medical publishing and curation platform to The Life Science Collaborative, an executive pharmaceutical and biopharma networking group in the Philadelphia/New Jersey area.

Our Team


For more information on the Vision, Funding Deals and Partnerships please see our site at http://pharmaceuticalintelligence.com/vision/


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E-Book Titles by LPBI

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For more information on Real-Time Conference Coverage including a full list of Conferences Covered by LPBI please go to http://pharmaceuticalintelligence.com/press-coverage/

For more information on Real-Time Conference Coverage and a full listing of Conferences Covered by LPBI please go to:

http://pharmaceuticalintelligence.com/press-coverage/ Slide7


The Pennsylvania (PA) and New Jersey (NJ) Biotech environment had been hit hard by the recession and loss of anchor big pharma companies however as highlighted by our interviews in “The Vibrant Philly Biotech Scene” and other news outlets, additional issues are preventing the PA/NJ area from achieving its full potential (discussions also with LSC)

Slide9Download the PowerPoint slides here: Presentationlsc

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The Bioscience Crowdfunding Environment: Will Crowdfunding be the Bigger, New VC

Reporter: Stephen J. Williams, Ph.D.


Pharmaceutical Consulting Consortium International Inc. (PCCI) recently presented their 7th annual Roundtable “CROWDFUNDING FOR LIFE SCIENCES: A BRIDGE OVER TROUBLED WATERS?”, a panel discussion on how this new funding mechanism applies to early stage life science companies and changes the funding landscape.

A major provision in the recently passed JOBS Act resulted in Securities & Exchange Commission (SEC) rule changes revolutionizing the way companies can raise capital, with some figures in the range of $11 trillion dollars. Companies, startups, and entrepreneurs can, in a manner, now go directly to the individual investor and raise capital. This method is generally referred to as CROWDFUNDING.

As explained by Mark Roderick, moderator for the meeting, there are two main types of approved crowdfunding:

  • Donation-based Crowdfunding – Popularized by the crowdfunding platform Kickstarter, this method of raising capital can accept small donations from anyone for an idea/project to be completed. The donor may either get a free token of appreciation or access to enjoy the fruits of the project, for example, a watching a movie funded by the donor. Some scientific researchers have used Kickstarter as a method to fund their research.
  • Investor-based Crowdfunding– This type of crowdfunding involves the actual transfer of securities, and investors must qualify according to rules set by the SEC and go thru brokers, or portals, like the bioscience and healthcare internet portal Poliwogg.

Investor-based crowdfundingwas discussed at the meeting.  There are five different mechanisms with this type of funding: Title II (Rule 506c), Title II, Title IV, Existing Regulation A, and Rule 504. The main focus of the meeting was on Title II as, according to Mr. Roderick, involves the mechanism most suited for biotech startups, while rules for Title III still need to be finalized.

Title II crowdfunding requires that “accredited” or “qualified” investors (those who make at least $200,000/year or net worth $1 million US) go through licensed dealer internet nodes (or Portals) like Poliwog. The Portal will have lists of startups they deem legitimate which investors can choose from. For instance the Epilepsy Foundation uses Poliwog to fund certain projects.

The panelists discussed matters including:

  • How crowdfunding is different than other mechanisms like venture capital
  • What are the regulations and financial responsibilities for both biotech and crowdfunder
  • Liabilities
  • Due-diligence issues

The panelists included:

  1. Mark Roderick, moderator. Mark is an attorney at Flaster/Greenberg PC (@CrowdfundAttny on Twitter) and has developed great experience and expertise in the details of crowdfunding. He maintains a Crowdfunding blog www.crowdfundattny.com, which contains information and links about the JOBS Act and crowdfunding.
  2. Barbara Schiberg, Managing Director at BioAdvance, a Mid-Atlantic bioangel investment community.
  3. Samuel Wertheimer, PhD, CIO Poliwogg, a crowdfunding internet portal.
  4. Darrick Mix, Partner, Duane Morris LLP, corporate lawyer with experience in the JOBS act
  5. Donlon Skerret, PCCI President and CEO of NanoScan Imaging and serial entrepreneur

The Opportunity















Recent estimates place Title II Crowdfunding capacity to $1 Trillion.

Venture Capital (VC) had estimated only $5 Billion bio-investment in 2013.

Where does the rest go?


Mr. Skerret noted that bioangels can only take you so far but thinks that crowdfunding may fill this “valley of death”.



Crowdfunding is SELLING SECURITIESso there is liability, disclosure and nondisclosure issues.

Title II contains 580 pages of regulations and SEC needs a licensed intermediary.




Barbara Schiberg also noted that with VCs or bioangels groups you also get s support network, basically their rolodex of contacts and KOL’s and experts. With Crowdfunding like Poliwog they just handle linking investors with entrepreneur. Any contact is done through social media and the crowd.


BioAdvance hires experts – may take months to years to get expert opinion


Poliwog only has responsibility to investor to make sure company is legitimate. They don’t do extensive due diligence like bioangels. Most crowdfunding do not have extensive networks of professionals.



To obtain a video recording of this meeting and get more information please go to PCCI’s web site at http://www.rxpcci.com/meetings.htm.


Other posts on this site related to FUNDING and Bio Investing include:


PCCI’s 7th Annual Roundtable “Crowdfunding for Life Sciences: A Bridge Over Troubled Waters?” May 12 2014 Embassy Suites Hotel, Chesterbrook PA 6:00-9:30 PM

10 heart-focused apps & devices are crowdfunding for American Heart Association’s open innovation challenge

Importance of Funding Replication Studies: NIH on Credibility of Basic Biomedical Studies

Partnerships & Funding

Updated: Investing and Inventing: Is the Tango of Mars and Venus Still on

Transforming Biotech & Pharma: LinkedIn is the Quiet Force by Timmerman

Technion-Cornell Innovation Institute in NYC: Postdocs keep exclusive license to their IP and take a fixed dollar amount of Equity if the researchers create a Spinoff company




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Reporter: Aviva Lev-Ari, PhD, RN

Countries colored in brown rank highly in the Growth Competitiveness Index 2004 – 2005, World Economic Forum. Black circles represent select biotechnology and life sciences clusters.

North AmericaSeattle, USA
San Francisco, USA
Los Angeles, USA
San Diego, USA
Saskatoon, Canada
*Minneapolis/St. Paul/Rochester USA
Austin, USA
Toronto, Canada
Montreal, Canada
Boston, USA
New York/New Jersey, USA
Philadelphia, USA
Baltimore/Washington, DC, USA
Research Triangle NC, USA
Central America / South AmericaWest Havana, Cuba
Belo Horizonte/Rio de Janeiro, Brazil
Sao Paulo, Brazil
United Kingdom / IrelandGlasgow-Edinburgh, Scotland
Manchester-Liverpool, England
London, England
Cambridge-SE England
Dublin, Republic of Ireland
Continental EuropeBrussels, Belgium
Medicon Valley, Denmark/Sweden
Stockholm/Uppsala, Sweden
Helsinki, Finland
Paris, France
Biovalley, France/Germany/Switzerland
BioAlps, France/Switzerland
Sophia-Antipolis, France
BioRhine, Germany
BioTech Munich, Germany
BioCon Valley, Germany
MideastIsrael AfricaCapetown,
South Africa
AsiaBeijing, China
Shanghai, China
Shenzhen, China
Hong Kong, China
Tokyo-Kanto, Japan
Kansai, Japan
Hokkaido, Japan
Taipei, Taiwan
Hsinchu, Taiwan
Dengkil, Malaysia
New Delhi, India
Hyderabad, India
Bangalore, India
OceaniaBrisbane, Australia
Sydney, Australia
Melbourne, Australia
Dunedin, New Zealand


Biotechnology: Biotechnology is the use of cellular and biomolecular processes to solve problems or make useful products. [Biotechnology Industry Organization – BIO]

Bioscience/Life Science: pharmaceuticals, biotechnology, medical devices, R&D in the life sciences. [Devol et al., 2005]

Clusters: Clusters are a geographically proximate group of interconnected companies and associated institutions in a particular field, including product producers, service providers, suppliers, universities, and trade associations. [Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School]

* Cited no. 8 for Total Life Sciences Current Impact by Devol (2005) defined as pharmaceutical, biotechnology, medical devices, and R&D in the life sciences. Minneapolis/St. Paul/Rochester is principally a medical device cluster.


Map is a Mercator projection that exaggerates the size of areas far from the equator.

Global biotechnology clusters map published by:

Andersen, Jørn Bang, “Establishment of Nordic Innovation Centres in Asia?” by the Nordic Innovation Centre for the Nordic Council of Ministers, Copenhagen, 2008.

Dimova, Maria, Andres Mitnik, Paula Suarez-Buitron and Marcos Siqueira. “Brazil Biotech Cluster: Minas Gerais” [PDF] Institute for Strategy and Competitiveness, Harvard Business School, Spring 2009.

Encyclopedia of Globalization, Routledge, November 2006.

Hamdouch, Abdelillah and Feng He. “R&D Offshoring and Clustering Dynamics in Pharmaceuticals and Biotechnology: Insights from the Chinese Case,” [PDF] The Spirit of Innovation Forum III, May 14-16, 2007.

Loh, Melvyn Wei Ming, “Riding the Biotechnology Wave: A Mixed-Methods Analysis of Malaysia’s emerging Biotechnology industry” [PDF] Victoria University of Wellington, New Zealand, 2009.

Murray, Fiona and Helen Hsi, “Knowledge Workers in Biotechnology: Occupational Structures, Careers & Skill Demands” [PDF] MIT Sloan School of Management, September 2007.

Rinaldi, Andrea. “More than the sum of their parts? Clustering is becoming more prevalent in the biosciences, despite concerns over the sustainability and economic effectiveness of science parks and hubs,”EMBO reports, February 2006 [PDF]

Royer, Susanne, “Crossing-borders: International Clusters: An analysis of Medicon Valley based on Value-Adding Web “ [PDF] University of Flensburg, July 8, 2007.

Salerno, Reynolds. “International Biological Threat Reduction at Sandia,” Sandia National Laboratory, July 31, 2006 [PDF]



The 26th annual issue of Beyond borders, E&Y annual report on the global biotechnology industry.

Our analysis of trends across the leading centers of biotech activity reveals both signs of hope and causes for concern. The financial performance of publicly traded companies is more robust than at any time since the onset of the global financial crisis, with the industry returning to double-digit revenue growth.

Companies that had made drastic cuts in R&D spending in the aftermath of the crisis are now making substantial increases in their pipeline development efforts.

But even as things are heading back to normal on the financial performance front, the financing situation remains mired in the “new normal” we have been describing for the last few years. While the biotech industry raised more capital in 2011 than at any time since the genomics bubble of 2000, this increase was driven entirely by large debt financings by the industry’s commercial leaders.

The money flowing to the vast majority of smaller firms, including pre-commercial, R&D-phase companies — a measure we refer to as “innovation capital” — has remained flat for the last several years.

As such, the question we have posed for the last two years is more relevant than ever: how can biotech innovation be sustained during a time of serious resource constraints?

These are timely topics, and we look forward to exploring them with you.

Take a closer look at our findings and point of view:

  • Holistic open learning networks -Holistic open learning networks (HOLNets) could make R&D shades more efficient by harnessing the power of big data to develop real-time insights.Even as biotech adjusts to its new normal, health care is moving to an outcomes-based ecosystem characterized by new incentives, new technologies and big data.

    HOLNets could reinvent R&D by pooling data, creating standards and engaging regulators and patients.

    Now, more than ever, this approach is feasible because it is in the self interest of the entities that would need to be part of it.

  • Financial performance heads back to normal -The aggregate financial performance of publicly traded biotechnology companies in the four established clusters — the United States, Europe, Canada and Australia — showed encouraging signs of recovery and stabilization.Growth in established biotechnology centers, 2010-11 (US$b)

    Source: Ernst & Young and company financial statement data.
    Numbers may appear inconsistent because of rounding.

    The acquisition of three large US companies — Genzyme Corp., Cephalon and Talecris Biotherapeutics —by non-biotech buyers made a significant dent in the industry’s 2011 performance.

    To get a sense of the organic “apples-to-apples” growth of the industry, we have therefore calculated normalized growth rates that remove these three firms from the 2010 numbers.

    After adjusting for these large acquisitions, the industry’s revenue growth rate returned to double-digit territory for the first time since the global financial crisis. R&D grew by 9% in 2011, after being slashed in 2009 and growing by a modest 2% in 2010.

    US biotechnology at a glance, 2010-11 (US$b)

    Source: Ernst & Young and company financial statement data.
    Numbers may appear inconsistent because of rounding.

    As always, since the US accounts for a large majority of the industry’s revenues, the US story is very similar to the global one.

    After normalizing for the acquisitions of Genzyme, Cephalon and Talecris , the US industry’s revenues increased by 12%, outpacing the 10% growth rate seen in 2010 and 2009 (adjusted for the Genentech acquisition).



  • Financing remains stuck in the “new normal”
  • Big pharma stayed away from M&A deals -Given the critical role that big pharma could play in supporting the biotech innovation ecosystem and the fact that the expected exit for most venture investors is an acquisition, this lack of activity is unsettling.With big pharma in the midst of crossing the long-awaited patent cliff, many expected a more pronounced upsurge in transactions — particularly for targets with product revenue or very late-stage product candidates.

    However, only Sanofi’s acquisition of Genzyme (which really played out in 2010 but did not get finally negotiated and closed until 2011) entered the ranks of the year’s 10 largest deals. Even more noteworthy, big pharma was the buyer in only 7 of the year’s 57 M&A transactions.

    US and European M&As, 2006-11

    US and European M&As, 2006-11Source: Ernst & Young, Capital IQ, MedTRACK and company news.
    Chart excludes transactions where deal terms were not publicly disclosed.

    Meanwhile, the number of strategic alliances declined for the second straight year, and the potential “biobucks” value of these deals hit a six-year low.

    US and European strategic alliances based on up-front payments, 2006-11

    US and European strategic alliances based on up-front payments, 2006-11




Resizing the Global Contract R&D Services Market

 A new study revises estimates of the market

By Kenneth Getz, Mary Jo Lamberti, Adam Mathias, Stella Stergiopoulos, Tufts CSDD

Published May 30, 2012

Pharmaceutical, biotechnology and medical device company managers serving every R&D function — from discovery and manufacturing through post-approval clinical trials — are keenly aware today of the integral role that outsourcing plays in supplementing capacity and expertise. Demand for outsourced services has increased sharply as drug and device development sponsors have downsized and consolidated infrastructure in response to a sharp global economic downturn, poor short-term revenue growth prospects and costly and inefficient operating conditions. In addition, startups and small companies actively leverage contract service providers to gain access to expertise and skills not available internally.Contract service organizations have proliferated across a wide spectrum of R&D services areas. A 2011 analysis by Tufts Center for the Study of Drug Development (Tufts CSDD) found a nearly four-fold increase in the number of contract research organizations (CROs) in the U.S. alone during the past decade: Whereas an estimated 800 contract service providers operated in the U.S. in 2000, more than 3,100 did so at the end of 2011. (Data on the proliferation of contract R&D service providers in Europe and in other regions around the world are not available.) In another study, Tufts CSDD found that in 2010, CRO-employed professionals were more than doubling the capacity of the global drug development enterprise — the first time in history when CROs were providing more head count in support of R&D activity than were pharma and biopharma companies.

Despite this dramatic proliferation during the last 10 years, however, little information exists that characterizes the size and characteristics of the overall global outsourcing landscape. Coverage of CRO markets and usage practices by peer-review and trade journals has largely focused on individual service areas aligned with either each publisher’s readership or the author’s primary area of expertise. Contract lead identification and optimization services markets and practices, for example, tend to be covered in publications reaching discovery scientists. Similarly, the contract formulation services area is typically discussed in publications catering to professionals in chemistry, manufacturing and controls. Some directories (e.g., Contract Pharma (www.contractpharma.com/csd), PharmaCircle (www.pharmacircle.com)) profile companies across contract R&D service areas. These directories do not publish macro-analyses of the global aggregate R&D outsourcing market.

Capital market analysts and industry observers have also largely focused on characterizing only the most mature R&D outsourcing markets: contract clinical and preclinical research services. These markets have historically had the highest prevalence of large, publicly-traded companies making it relatively easy to monitor performance, assess transactions and evaluate corporate strategies. Goldman Sachs, UBS, Fairmount Partners, Jefferies and William Blair are among the many financial services firms that support transactions and cover developments in the global outsourcing marketplace. Published reports from these organizations typically only cover and estimate the size of the clinical and preclinical markets — a fraction of the total contract services marketplace. Industry professionals and analysts tend to use these estimates as proxy measures for total market size when they grossly underestimate the size of the overall outsourcing market.

Two recent reports stand out as noteworthy attempts to size the overall CRO market and affirm the growing interest in this aggregate market metric: the Harris Williams & Company 2008 Market Monitor report and the 2011 BCC Research Report. The former report focused on the larger healthcare and life sciences arena but estimated — using a top-down approach — the size of the contract clinical, preclinical, manufacturing, clinical laboratory and sales markets. Harris Williams, a private investment banking firm, estimated that the total market for these specific service areas in 2008 reached approximately $75 billion. The later BCC Research report sized the overall 2011 global outsourcing market at $217.9 billion. This top-down analysis included not only contract service providers supporting prescription drugs, but also over-the-counter and nutraceuticals products.

As demand for — and the adoption of — contract research services has grown there is a greater need for more accurate and comprehensive measures of the size and structure of the overall landscape. Better metrics assist companies and analysts in assessing the financial health, trends, structure, operating conditions and maturity of the overall market for contract research services. Sponsor companies can also use these metrics for strategic planning purposes and to forecast the impact of new management practices on the landscape. More accurate metrics enable analysts to monitor consolidation, diversification and divestiture activities. And more accurate descriptive statistics on the landscape assist CRO companies in developing, implementing and evaluating strategic initiatives.

In late 2010, Tufts CSDD began a new study using a rigorous, bottom-up approach to independently size the U.S. market for all contract R&D services. The goal of the study was to perform a carefully designed, methodical and systematic market-sizing study using actual data wherever possible. It is our hope that this initial but definitive quantitative assessment will serve as a basis for sizing contract service providers in Europe and in the rest of the world, and that it will better inform discussion, analysis and understanding of the global outsourcing landscape.

Tufts CSDD focused on the U.S. market for this initial study due to the labor-intensive nature of analyzing a large, fragmented market predominantly made up of small, privately held organizations and independent consultants. Tufts CSDD developed detailed definitions of primary contract service markets, and compiled a list — to the best of its ability — of all known contract service providers in each respective market within high concentration metropolitan and industrial areas. A total of 15 major geographic clusters, defined by Metropolitan Statistical Area (MSA), were identified and analyzed. These clusters capture approximately 75% of the list of contract service companies operating in the US. Contract service companies operating within these 15 geographic regions likely capture an even larger proportion of total U.S. outsourced services revenue as these companies include all the major, widely-recognized players. Data on more than 4,500 companies — some of them divisions or branches of diversified players — were analyzed.

Market Segment Definitions: The five primary market segments evaluated correspond with primary R&D and manufacturing processes: Applied Research, Non-Clinical Research, Clinical Research, Chemistry Manufacturing and Controls (CMC) and Staffing-Consulting-Management (Other) services. This ‘Other’ segment includes a wide variety of small, independent companies as well as large providers offering contract professional staffing, supply chain management, import/ export and distribution services as well as business development support. Specific main service category and common sub-category service areas within each of the primary market segments are characterized in Figure 1. (Main Categories and Sub-Categories are not mutually exclusive.)

Figure 1: Service Area Map

Service Provider Identification: Tufts CSDD used seven published, commercially available print and online directories of contract service providers to identify individual contract R&D services companies:

  • Applied Clinical Trials 2010 Directory & Buyers Guide
  • Contract Pharma2010/2011 Contract Services Directory
  • Fierce Marketplace 2010/2011 Directory for Contract Manufacturing
  • Hoovers.com Biotechnology Services Directory
  • The Pharmaceutical OutsourcingTM 2011 Company Focus and Industry Reference Guide (Volume 11, Issue 6, October 2010)
  • The PharmaCircle Database 2010/2011
  • ReferenceUSA.com (SIC Code 591207; “Pharmaceutical Consultants”) as of December 2010

Top Areas of Geographic Concentration: From these directories, company names and addresses were captured. Each company’s main address zip code was organized according to the U.S. Office of Management and Budget (OMB)’s definition of Metropolitan Statistical Areas (MSA). This approach was used in order to systematically identify and analyze areas of highest geographic concentration. The OMB’s definition of the MSA is “one or more adjacent counties or county equivalents that have at least one urban core area of at least 50,000 population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties.” The largest 15 geographic areas, defined by MSAs, containing contract service providers are:

  • New York/Northern New Jersey (i.e., New York-Northern New Jersey-Long Island)
  • Greater Boston (i.e., Boston-Worcester-Lawrence)
  • Delaware Valley (i.e., Philadelphia-Wilmington-Atlantic City)
  • Los Angeles (i.e., Los Angeles-Riverside-Orange County)
  • The Washington DC Area
  • San Francisco Bay (i.e., San Francisco-Oakland-Freemont)
  • San Diego (i.e., San Diego-Carlsbad-San Marcos)
  • Durham NC (i.e., Durham-Chapel Hill)
  • Greater Chicago (i.e., Chicago-Joliet-Naperville)
  • Greater Baltimore (i.e., Baltimore-Towson)
  • Raleigh NC (i.e., Raleigh-Cary)
  • Minneapolis (i.e., Minneapolis-St. Paul-Bloomington)
  • Kansas City Area
  • San Jose (i.e., San Jose-Sunnyvale-Santa Clara)
  • Houston (i.e., Houston-Sugar Land-Baytown)

Figure 2 provides a visual representation of the 15 highest concentration areas of contract R&D services providers in the United States. These concentrated areas of contract service providers are in close proximity to geographic areas where pharmaceutical, biotechnology and manufacturing sectors in the US originated.

Figure 2: High Concentration Geographic Areas

Contract Service Company Types: Tufts CSDD organized companies along the following lines to assist with its evaluation of overall market and service segment characteristics:

  • Pure-play companies: companies offering only one service area main-category. Examples of pure-play companies include: Abpro Corporation, cGMP Validation LLC. and Profacgen.
  • Mid-sized companies: companies with two to five service area main-categories. Examples include: Accugenix Inc., Beckloff Associates Inc., QS Pharma and the Zitter Group.
  • Conglomerate companies: companies with six or more service areas main-categories. Examples include: Aptuit (multiple sites); Covance (multiple Sites); PPD (multiple sites) and Quest Diagnostics (multiple sites)

(Service areas are defined in Figure 1.)

Tufts CSDD used company websites to determine branch and satellite office locations. If a company did not have a website, it was removed from the analysis. If the website did not specify which site performed which service, it was assumed that all locations offered the same number of services.

For publicly traded companies, Tufts CSDD used published company reports — annual reports, 10Ks, trade journal and newspaper articles — for operating information, revenue figures, locations and employee size. For privately held companies, Tufts CSDD used Hoovers.com.

Actual revenues and employee data were used whenever possible. In those cases where actual data were not available, financial and employee data were imputed using benchmark metrics derived from actual data:

  • Pure-play companies: assigned average revenue and employee values based on actual data from other pure-play companies.
  • Mid-sized companies: derived revenue and employee values based on actual data from companies of equal size and diversity.
  • Conglomerate companies: derived revenue and employee values based on actual data from companies of equal size and diversity.
  • Public companies: If service area-specific revenue and employee data was not reported, values were distributed equally across service areas.

In total, 3,244 unique contract R&D service companies actively operating in the U.S. were identified and analyzed. These companies generated an estimated $32.9 to $39.5 billion in contract R&D services revenue with the largest share coming from the CMC and Non-Clinical market segments — 29%, and 21% respectively. The U.S. Clinical Research Services segment — which includes regulatory services — generated approximately $6.5 billion. Chart 1 shows the relative U.S. market share of each contract R&D service segment.

In the aggregate, companies operating in the overall U.S. contract R&D services market employ approximately 154,000 people and were founded more than 17 years ago. The typical company is privately-held, generates $10 million ($US) in revenue annually and is operating in 1.4 service areas.

The CMC and Non-Clinical Research segments have the largest number of companies providing services as shown in Chart 2. An estimated 1,274 companies in the U.S. offered CMC services in 2011, and 1,205 companies in the U.S. offered Non-Clinical Research Services. The Clinical Research segment had 643 active companies in the U.S. providing services in 2011.

The majority — 69% — of contract R&D service providers overall are privately held companies. CMC and Non-Clinical Research services segments have the highest concentration of publicly traded companies at 47% and 52% respectively. Approximately 17% of all companies providing Clinical Research Services are public. Chart 3 depicts the proportion of public to private companies in each major U.S. contract R&D services market segment.

Applied Research Services and Other Services U.S. market segments are the least mature and most productive segments, as reflected in Table 1 and Table 2. Companies in the Applied Research Services segment are the youngest, the most likely to be privately held, and the smallest. As a more nascent segment, revenue per employee in the Applied Research Services segment is one of the highest, at $267,000. The Other Services segment is also relatively young, with a high concentration of privately held companies. Revenue per employee in this segment is higher than any other U.S. market segment, at $284,000.

Individual companies in the Clinical Research Services and Other Services segments generate more revenue per company and have relatively higher levels of employee productivity. The CMC and Non-Clinical Research Services segments are the most mature, with the highest proportion of publicly-traded companies, the highest average number of employees and the lowest relative employee productivity.

This initial Tufts CSDD study sizes the overall U.S. contract R&D services using a systematic bottom-up approach based on actual company data whenever possible and imputed data based on benchmarked actuals. The overall U.S. market for the 15 highest concentration geographic areas — as defined by MSA — is estimated at between $32.5 and $39.5 billion. Assuming that these geographic areas represent 75% of the total U.S. market, and that the U.S. market contributes 50% of contract services worldwide, Tufts CSDD estimates that the total global market for all contract services supporting prescription drug R&D is $90 billion to $105 billion. The total global market for contract R&D services therefore is more than five times larger than commonly cited figures.

Adjusting the service areas to adhere to traditional market definitions established by the investment banking community, the Tufts CSDD figures for the Clinical Research and Preclinical Research markets are consistent with those published by financial analysts (see Table 3).

It is highly likely that the overall market and individual segment sizes are larger than the conservative estimates presented in this paper. Tufts CSDD acknowledges the limitations of usingHoovers.com to characterize the high proportion of privately held companies, as Hoovers tends to present ultra-conservative figures. In addition, there are some limitations to using imputed data within service area revenues, as there is a tendency to inflate the smallest company revenue. However, using our estimates combined with actual data from public and some private companies helps to mitigate this limitation to some degree.

The major market segment definitions and service areas that comprise them are a useful approach to organizing contract services companies and it may provide a valuable framework for future analyses. The Tufts CSDD study finds that all of the market segments are accommodating very large and highly diversified publicly traded companies and many small, specialty companies. CMC and Non-Clinical Research segments are the most mature with the oldest relative companies, the highest proportion publicly traded, and the lowest levels of employee productivity (e.g., revenue per employee). Segment maturity is a function of historical receptivity by pharmaceutical, biotechnology and medical device companies to outsource high fixed cost, manufacturing and labor-intensive activities that are deemed non-core. Relative to the other segments, the Clinical Research Services segment is one of the most productive with the highest proportion of privately held companies.

The Other Services segment remains too diverse, making it difficult to characterize this segment adequately. In the future, Tufts CSDD will look to refine the definition of this segment to ensure that it is a more homogeneous group of companies.

At the present time, Tufts CSDD is analyzing contract services company data by geographic cluster to better understand the economic impact of each market segment locally. In addition, Tufts CSDD plans to apply this more robust methodology to sizing the overall contract services market in Europe and in other major global regions.

Drug and device innovation is evolving and re-inventing itself continually. As R&D costs rise, operating and regulatory complexity increases, and mergers, acquisitions and consolidation continue, the use of contract service providers as integral and integrated sourcing providers will similarly continue to grow. It is our hope that the analysis and results contained in this article will play a role in improving future assessments of the size and structure of the outsourcing landscape.

Kenneth Getz, MBA, is Senior Research Fellow and Assistant Professor at Tufts Center for the Study of Drug Development. He can be reached at kenneth.getz@tufts.eduMary Jo Lamberti, Ph.D., is Senior Project Manager at Tufts CSDD. Stella Stergiopoulos is project manager, Tufts CSDD.  Adam Mathias is Research Analyst, Tufts CSDD. This project was funded by an unrestricted grant from the Kansas Bioscience Authority (KBA).



US cities lose jobs and revenues as big

pharma companies close R&D facilities

By Tony Favro, USA Editor*

9 April 2012: 

In 2007, Pfizer, the pharmaceutical company, closed its research and development facility in Ann Arbor, Michigan, displacing 2100 workers. In 2009, the University of Michigan purchased the vacant site and expected to create two to three thousand jobs over ten years. At the time of the sale, Ann Arbor Mayor John Hieftje expressed mixed emotions. On the one hand, he said in a statement, “If the University of Michigan is able to greatly expand life sciences research in Ann Arbor it will have far-reaching long-term economic benefits for the whole region.” On the other hand, Mayor Hieftje told Crains’ Detroit Business newspaper, “[The deal] has troubling aspects for local government”. Hieftje was referring to the $14 million in local taxes paid by Pfizer, which will not continue since the University of Michigan is a tax-exempt organization.

• Profits versus R&D
• The Government steps in
• Shift in research culture
• Bigger government

The Ann Arbor story is not unique. According to the US Bureau of Labor Statistics, the pharmaceutical industry shed 35,000 in the United States in 2010, the most recent year for which complete data are available. Cities throughout the US were burdened by plant closures. Ann Arbor was luckier than most cities. The University of Michigan employed about 1,700 workers at the former Pfizer site at the end of 2011. These workers are doing much of the research formerly done by Pfizer — and this gets to the heart of the matter. Big pharma companies are abandoning basic drug research, leaving the federal government and universities to pick up the slack.

Profits versus R&D
According to the August 2011 issue of the journal Nature Reviews Drug Discovery, the decline of prescription drug research and development R&D is the result of 15 years of continuous industry consolidations and the drive by drug manufacturers to maximize profits.

Since 2000, for example, Pfizer has acquired three major drug makers, Warner-Lambert, Pharmacia, and Wyeth, closing research centers with each acquisition. “These [closed] sites housed thousands of scientists, and many major drugs were discovered there,” the journal notes. “The same pattern has been observed after most of the mergers and acquisitions by other major pharmaceutical companies during the past decade.”

Profit is another reason big pharma companies are abandoning basic research. Over the past couple of decades, big drug firms competed to produce blockbuster drugs that yielded huge payoffs. Drugs such as Merck’s Vioxx and Pfizer’s Lipitor generate several billion dollars in annual sales and reap big profits for their makers. The fierce competition leads to costly duplication of work with as many as 20 companies vying to be the first to come out with the next blockbuster drug. The stakes for drug companies become higher as patents expire for popular and profitable drugs and revenue streams dry up.

The potentially enormous profits of a breakthrough discovery, however, are proving too elusive to offset the heavy upfront costs of basic research and development, an estimated 10 to 20 per cent of total expenditures. As a researcher told the Rochester Business Journal, “The days of the blockbuster drug are over”.

Businesses survive by making money for their shareholders, and when part of a business can no longer reliably generate profits — in this case, basic drug research — the unprofitable part is understandably jettisoned.

This makes good business sense, but poor public policy. People need pharmaceuticals — in many instances, it’s a question of life or death — and so the federal government has had to fill the void left by drug companies’ retreat from basic and early-stage research.

The government steps in
Over the past few years, the federal National Institutes of Health has invested hundreds of millions of dollars to build a drug-discovery infrastructure. Most of the federal expenditures have been used to establish a network of 60 “clinical translational centers” at research universities. These centers are changing the direction of pharmaceutical research and creating new opportunities for public-private collaborations.

In essence, the emerging drug-development model in the USA has big pharmaceutical firms coming in at a later stage to market and distribute drugs that have been discovered and tested by university researchers and small, private biotech companies.

The emerging model promises to greatly expand opportunities for universities to earn royalties from pharmaceutical companies. The federal funding for “translational” research also incentivizes entrepreneurship at universities. Universities that develop and hold patents are expected to translate that knowledge into jobs, not only by contracting with big pharma but also by incubating and spinning-off small, private drug-development companies. In the federal model, big drug makers will strike licensing deals directly with universities or with small companies, primarily university spin-offs. One potential benefit of the new model is that entire categories of drugs previously ignored by big pharma because of their low-profitability may now be brought to market.

Shift in research culture
Federal monies are helping build a research infrastructure at the university level to bring basic discoveries to market as well as catalyze broader economic growth. This requires a culture shift at both universities and businesses. Traditionally, a scientific advance by a university professor might end as a research paper read by a few colleagues in the same field. In the clinical translational model supported by the National Institutes of Health, scientists must collaborate with colleagues in different fields — the chemist with the engineer and sociologist and marketing professor, for example. Drug companies also have to discuss their research and results with academics and with their counterparts at different drug firms. They can no longer label such information as proprietary and keep it to themselves.

Bigger government
Critics of big government should take note: when businesses contract, government often has to expand to protect citizens. Businesses may create jobs, but they will also pass their costs to taxpayers when they can. Large drug companies consider delivering a return to shareholders their first duty, and therefore cut R&D that drains short-term profits. But short-term business sense may threaten public health and even the profitability of corporations since, over the long-term, a less-healthy labor pool could drive up the cost of doing business.

And sometimes government requirements and mandates, such as the clinical translational research model, can spark economic growth. According to Dr. Karl Kieburtz of the University of Rochester, one of the first universities to be funded by the National Institutes of Health, “We are looking at many things, surgical devices and other things, not just drugs.” The University of Rochester, which purchased a building that Wyeth vacated for research, has already spun-off 30 companies. As multinational pharmaceutical companies unload more of their marginally-profitable but publicly-indispensible activities, the public and nonprofit sectors will have to fill the gap.

The effect on US city governments is uneven. Cities will lose jobs and property tax revenues when pharmaceutical companies close their R&D facilities. Cities fortunate enough to have a university with a translational research center should eventually recover their losses and more.

*Tony Favro also maintains the blog Planning and Investing in Cities.



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Reporter: Aviva Lev-Ari, PhD, RN

The Price of Togetherness

Is togetherness the latest drug? Will touchy feeliness be the answer to the pharmaceutical industry’s crisis of productivity? Collaboration certainly isn’t anything new in the life sciences, but the nature and structure of partnerships is evolving to the point that many companies are now contemplating pooling their resources…and diluting their returns.

Certainly the past decade has been marked by more partnerships between industry and academia, where there has been an effort to find a win-win solution to academia’s funding deficits and pharma’s desire to get more helping hands in early innovation.

Out of this have grown “open-source” research efforts that use pharma’s financial backing to create or aggregate data any researcher can use. Sage Bionetworks, a three-year-old Seattle-based non-profit, offers a “commons” of pooled data and resources. Merck has contributed many human and mouse disease models for open consumption. Eli Lilly has opened up its doors to compounds created at academic labs through its PD2 and other Open Innovation Drug Discovery efforts. In 2008, GlaxoSmithKline released over 300 cell lines to the National Cancer Institute’s Cancer Bioinformatics Grid, open for academics to mine. The Structural Genomics Consortium is an open-access database of 3-D protein structures that counts Lilly, GSK, NovartisPfizer, and most recently Takeda among its members and financial backers.

While these kinds of open efforts come with a series of challenges concerning ownership, consent and disclosure, and many other issues, they exist because industry increasingly recognizes that biology is too complex for any one company, even a large one, to tackle on its own.

Major drug companies have also started to innovate the way they work with venture capitalists to help nurture early research. Johnson & Johnson announced back in January that it is partnering with Polaris Venture Partners to scout out and co-invest in biotech startups–presumably structuring deals such that venture backers can find an exit without relying on the lousy IPO market. And they’re hardly alone–as I highlighted a few months ago..

But now drug companies are starting to do the unthinkable–work directly with each other. They’ve taken baby steps in this direction before, often with a focus on emerging markets and diseases not viewed as critical profit-drivers. For example, 13 major drug companies joined the Bill and Melinda Gates Foundation earlier this year to combat tropical diseases. But rather than just contributing medicine, some of the companies– Abbott, Johnson & Johnson and Pfizer–are actually collaborating on research as part of the Drugs for Neglected Diseases Initiative. All the companies are sharing compound libraries.

That’s not entirely unprecedented, but companies that have wanted to work closely together in the past have formally launched joint ventures, like the HIV-focused ViiV Healthcare venture between Pfizer and GlaxoSmithKline.

Now these cooperative efforts are broadening. One announcement made at the recent Biotechnology Industry Organization (BIO)convention is the formation of a consortium for neuroscience research between seven companies including Biogen, Abbott Labs and Merck. The stakes a fairly small, at least money-wise–each company is only pledging $250,000 at this point. But it is symbolically important that they are sharing all the costs of basic research, as well as their expertise, to try to quickly and efficiently get R&D off the ground.

While some of this newfound camaraderie might be difficult for companies dreaming of developing blockbusters and keeping all the profits to themselves, there is a silver lining. The growing demand for drugs in emerging markets means that some of these collaboratively developed drugs may eventually reach much broader audiences–meaning larger populations over which to recoup development costs, bigger opportunities for rare disease indications, and acceptable profits even if prices are forced lower. That should be some consolation.

-Karl Thiel


More by Karl Thiel


Picturing US-Trained PhDs’ Paths

While the US National Institutes of Health Advisory Committee to the Director’s Biomedical Workforce Working Group issued a draft report this month, detailing data it collected as well as its recommendations for the federal agency, Sally Rockey really breaks it down at her NIH Office of Extramural Research blog. “I plan to highlight some of the specific data in future posts, but first, I’d like to discuss the outcome — the conceptual framework that presents a snapshot of the biomedical research workforce, incorporating the latest available data,” she says. And she does, in an infographic that follows the career paths of the 9,000 biomedical PhDs who graduated in the US in 2009. Seventy percent of them went on to do postdoctoral research, Rockey notes.

Down the line, “looking at the career paths taken by these US-trained biomedical PhDs, we can see that fewer than half end up in academia, either in research or in teaching, and only 23 percent of the total are in tenured or tenure-track positions,” she adds. “Many other people are conducting research, however, with 18 percent in industry and 6 percent in government.”

Overall, Rockey says, the non-academic biomedical workforce is huge. “If you’re a graduate student or postdoc looking at these numbers, particularly the proportion of people in industry and government settings, it makes sense to learn as much about these career paths as possible,” she writes at Rock Talk.


NIH Advisory Committee to the Director’s Biomedical Workforce Working Group Issues Draft Report

 The US National Institutes of Health Advisory Committee to the Director’s Biomedical Workforce Working Group issued a draft report this week that summarizes data it has collected and includes recommendations “that can inform decisions about training the optimal number of people for the appropriate types of positions that will advance science and promote health,” it reads.In its report, the working group emphasizes the overall purpose of its research efforts and resulting recommendations, namely “to ensure future US competitiveness and innovation in biomedical research” through proper undergraduate, graduate, and postdoctoral training and to “attract and retain the best and most diverse scientists, engineers, and physicians from around the world,” as well as domestically.When it comes to graduate education, the working group suggests that NIH cap the total number of years a grad student can be supported by NIH funds, in order to encourage timely completion of PhD studies.As for graduate career training, the working group says that because around 30 percent of biomedical PhDs work in the biotech and pharmaceutical industries — in both research and non-research positions — “their transition would be more effective if their training was better aligned with the required skill-sets for these careers.” In addition, “institutions also could be encouraged to develop other degree programs — e.g. master’s degrees designed for specific science-oriented career outcomes, such as industry or public policy … as stand-alone programs or provide sound exit pathways for PhD students who do not wish to continue on the research career track,” the group continues.For PhDs who do wish to continue on with a postdoctoral fellowship, the working group suggests that NIH “create a pilot program for institutional postdoctoral offices to compete for funding to experiment in enriching and diversifying postdoctoral training,” and adjust the current stipends for the postdocs it supports to better reflect their years of training.In addition, the group recommends that NIH double the number of Pathway to Independence (K99/R00) awards it issues and shorten the eligibility period for applying to this program from five to three years of postdoc experience to encourage more PhDs to swiftly move into independent research positions. Likewise, the group suggests that NIH also double the number of NIH Director’s Early Independence awards “to facilitate the skip-the-postdoc career path for those who are ready immediately after graduate school.”More generally, the Biomedical Workforce Working Group recommends that institutions receiving NIH funds ramp up their efforts to collect information on career outcomes of the grad students and postdocs supported by federal research grants.

Finally, the group suggests that NIH create a permanent unit in the Office of the Director that would work with the extramural research community, the National Science Foundation, and the agency’s other institutes and centers “to coordinate data collection activities and provide ongoing analysis of the workforce and evaluation of NIH policies so that they better align with the workforce needs.”


Rock Talk

Helping connect you with the NIH perspective

So, What Does the Biomedical Research Workforce Look Like?

Posted on June 22, 2012 by Sally Rockey

Update 6/27/12: The full report is now posted on the ACD website.

As I blogged last week, and most of you have heard by now, a working group of the Advisory Committee to the NIH Director (ACD) that I co-chaired with Shirley Tilghman from Princeton just completed a study of the biomedical research workforce. We reported our findings to the ACD last Thursday (you can find a link to the videocasthere).

We gathered a lot of data during this study, which are included in the report (see the ACD site for the executive summary and instructions for obtaining a copy of the full report). The data also are posted on an accompanying website. I plan to highlight some of the specific data in future posts, but first, I’d like to discuss the outcome—the conceptual framework that presents a snapshot of the biomedical research workforce, incorporating the latest available data. The framework of the PhD workforce is presented below, and a companion framework for MDs and MD/PhDs in the biomedical research workforce can be seen in the report and on the website.

First, 9,000 biomedical PhDs graduated in the US in 2009 (including basic biomedical and clinical sciences), and 70% of these went on to do postdoctoral research. As we conducted our analysis, it became clear that there are few reliable data on the number of biomedical postdoctoral researchers in the US. We lack solid information on foreign-trained postdoctoral researchers, and many postdoctoral researchers change their title as they proceed through their training, complicating the data collection. That’s why the estimate of postdoctoral researchers ranges from 37,000 to 68,000.

Looking at the career paths taken by these US-trained biomedical PhDs, we can see that fewer than half end up in academia, either in research or in teaching, and only 23% of the total are in tenured or tenure-track positions. Many other people are conducting research, however, with 18% in industry and 6% in government.

The science related non-research box includes individuals working in industry, government, or other settings who do not conduct research but are part of the scientific enterprise. Many of the career paths represented by this box contribute to the scientific research enterprise and require graduate training in biomedical science. For example, program and review officers at NIH and managers in many biotechnology companies would be included in this group. This is my box too. It’s interesting to note the 18% included in this group is made up of PhDs employed in industry (13% of the total workforce), in government (2.5%), and in other settings (2.5%). This means that all individuals working in industry (research plus non-research occupations) represent about 30% of the workforce, and all those working in government represent about 9% (more than 10,000 individuals).

That leaves 13% in non-science related occupations and 2% unemployed (this does not include retirees or those who choose not to work). These are 2008 data, the latest available from the NSF Survey of Doctoral Recipients.

If you’re a graduate student or postdoc looking at these numbers, particularly the proportion of people in industry and government settings, it makes sense to learn as much about these career paths as possible. I’m very proud that we were able to develop this framework, as it seems that for the first time we have an idea of where domestically trained biomedical researchers are going. I was quite surprised by the idea that the majority of our trainees do not end up in academia. Did this surprise you?

diagram shows the flow of college graduates through graduate and postgraduate training and into the workforce

Notes on the figure

The main sources of the original data, from which the graphs in the report were made and these numbers were derived, come from three NSF surveys: the Survey of Graduate Students and Postdoctorates, the Survey of Earned Doctorates, and the Survey of Doctorate Recipients. You can see the specific sources of each number by clicking on the relevant box on the website.

The color of the numbers reflects our confidence in the accuracy of the data: high (green), medium (yellow), or low (red). For more details see colors. In this case, the red numbers in the post-training workforce box are accurate, but the color reflects the fact that we know almost nothing about the distribution of foreign-trained PhDs in the workforce, so the overall picture is an under-estimate.

The post-training workforce boxes are color coded, with light blue denoting those in research positions and academic teaching positions. The science related non-research box is colored dark blue to indicate that many of the careers represented in this box are closely related to the conduct of biomedical research.


Live Chat: Are We Training Too Many Scientists?

by Jocelyn Kaiser on 27 June 2012, 8:30 AM |
Too many graduate students and postdocs chasing too few academic jobs has led to a dysfunctional biomedical research system. That’s the conclusion of a draft report on the biomedical workforce released this month by an advisory panel to the National Institutes of Health (NIH). The panel urged taking steps to shorten young scientists’ career paths, including capping how long graduate students can receive NIH support and better preparing them for non-academic careers. The report also encourages university labs to rely more on staff scientists rather than trainees.

But is it a good idea to tinker with the research system at a time when NIH funding is tighter than ever? And given that most biomedical Ph.D.s will find a job, are there really too many?

NIH Panel Urges Steps to Control Growth in Biomedical Research Trainees

by Jocelyn Kaiser on 14 June 2012, 5:50 PM |
A glut of trainees and a dearth of academic positions in the United States is creating a dysfunctional biomedical research system, an advisory group to the National Institutes of Health (NIH) concluded today. It urged several steps be taken to bring the problem under control. NIH should cap how many years it will support graduate students, pay postdoctoral researchers more, and encourage universities to fund staff scientist positions.

The changes may appear to make research labs less productive, but in the long run will result in “a more vibrant workforce,” said Shirley Tilghman, president of Princeton University and co-chair of the panel that delivered the draft report.

The widely anticipated report comes from a working group of the NIH Advisory Committee to the Director (ACD) co-led by NIH Deputy Director for Extramural Research Sally Rockey. The panel spent a year examining available data on the number and fate of biomedical researchers through different stages of their careers, focusing on the slow pace of advancement and the often-cited fact that the average age for an investigator winning the first independent grant from NIH is 42. (The panel’s economists abandoned a plan to model the workforce—there wasn’t time or sufficient data.)

 Live Chat: Are We Training Too Many Scientists? 

In the executive summary of their draft report, the panel found that a steep rise in U.S. biomedical Ph.D.s in the past decade, more foreign postdocs, and the aging of academic faculty members make it increasingly hard for young biomedical researchers to find academic jobs. Biomedical researchers are paid less than scientists in other fields, and the low pay and long training period may make the field unattractive to the best and brightest.

To address the problem, NIH needs to make some changes, the panel says. The agency should provide supplements to training grants that help students prepare for alternatives to academic careers, such as a master’s degree geared toward an industry position. It should cap how long a graduate student can receive NIH funding at 6 years (the average length of a biomedical Ph.D. including all funding is now 6.5 years, says Rockey). NIH should find ways to shift the funding source for graduate students, most of whom are now paid out of investigators’ grants, to training grants and fellowships. The reason: such programs provide higher quality training, and their graduates tend to be more successful than those funded from grants.

Postdoctoral researchers should also be supported to a greater extent by fellowships and training grants, the panel says. And postdoc stipends should be increased—starting with the entry level, now $39,264, which should rise to $42,000—and they should receive better benefits. “We think it is scandalous how [little] postdoctoral fellows are paid,” Tilghman said.

NIH should also encourage study sections to look favorably upon research projects that employ staff scientists, and institutions should create more of these positions. There is an “urban myth” that staff scientists are less productive than graduate students, Tilghman said. In fact, she said, graduate students are productive for a couple of years but are otherwise a “drain on the system.” Staff scientists, by contrast, are “often the glue that holds your lab together.”

Although the panel did not say the overall number of trainees should decline, the recommendations, if adopted, should make the growth in the number of trainees at least slow down because “we’re making it more expensive to have those individuals,” Tilghman said.

The recommendations drew concern from at least one ACD member. Biologist Robert Horvitz, of the Massachusetts Institute of Technology in Cambridge, questioned whether NIH should make “risky” changes to the system at a time when NIH is struggling with flat budgets and record-low success rates. “Some of this makes me very nervous,” he said. But Tilghman, who headed a National Research Council panel 14 years ago that she said came to “identical conclusions,” disagreed. “The only time it’s possible to make hard decisions … is actually during tough times,” she said.

NIH Director Francis Collins said he would like see some “experiments” before making “more systemically disruptive” changes to the funding system. But, he added, this time the Tilghman panel’s recommendations “will go somewhere. I promise you that.”

Tomorrow, ScienceInsider will post a story on another draft report presented later in the ACD meeting on diversity in the biomedical research workforce.


Can NIH Renovate the Biomedical Workforce?

By Michael Price

June 22, 2012

“The most effective training dollars that the NIH has to expend are those in their training grants.” —Shirley Tilghman

When molecular biologist and Princeton University President Shirley M. Tilghman first sounded the alarm about the need for major overhauls to the way the United States trains its biomedical workforce in the 1998 National Academies of Science report Trends in the Early Careers of Life Scientists, many of her proposals fell on deaf ears. Fourteen years later, Tilghman is arguing again for training reform, this time as chair of the National Institutes of Health (NIH) Biomedical Research Workforce Working Group.

Last week, Tilghman presented a draft of her group’s latest report to NIH’s Advisory Committee to the Director (ACD) at NIH headquarters in Bethesda, Maryland. In the report, the group calls on NIH to divert funding from research grants to training grants for graduate students, support more postdocs on training grants, increase pay and improve benefits for postdocs, and boost the prestige and remuneration of staff scientist positions in academic labs.

At the presentation, Tilghman and the other members of the working group argued that in its present state, the graduate training system at our nation’s universities and the workforce that graduates enter into are dysfunctional and unsustainable. At the root of that dysfunction, Tilghman said, is a mismatch between the training most graduate students receive and the careers most Ph.D. graduates end up in.

Shirley Tilghman

The number of academic jobs has shrunk dramatically compared to the number of new graduates. NIH estimates that 26% of biomedical Ph.D. recipients end up in tenure-track academic positions, down from 34% in 1993; meanwhile, the proportion of nontenure-track academic positions has remained constant. The growth in jobs for Ph.D. biomedical scientists, the working group concluded, is outside academia, so new graduates must be prepared to work in other roles: in industry, in government, or in positions tangentially related to their degrees, such as science writing or policy, Tilghman said.

Shifting funds toward training

How can universities prepare graduate students better for the careers they’re most likely to wind up in? One way, Tilghman said, would be for NIH to shift funding from R01 research grants, which currently support the majority of graduate students in biomedical sciences, to NIH training grants, which are peer-reviewed by NIH for their training-related virtues. The total number of graduate students supported by NIH, the report says, should remain constant.

While the number of graduate students supported by research grants has been higher than the number supported on training grants since the early 1980s, the gap steadily widened as NIH’s research budget grew—then shot up in the early 2000s when NIH’s budget doubled over 5 years (see graph below).

CREDIT: National Institutes of Health

Research grants are far and away the most common source of funding for graduate students today. Click here to enlarge image.

The report’s authors argue that many graduate students are ill-served by this approach because it limits the ability of NIH to hold principal investigators (PIs) accountable in their roles as mentors. Without oversight, Tilghman argued, it’s easy for PIs to see and treat their graduate students as laborers rather than scientists in training. If a larger proportion of the graduate student population were supported on training grants, she said, NIH could better monitor students’ training and ensure broader exposure to careers outside of academia—and better training in the skills needed to perform well in those careers.

The members of the working group “are, I think, unanimously of the view that the most effective training dollars that the NIH has to expend are those in their training grants,” Tilghman said. “Training grants are immensely effective at inducing good behavior on the part of graduate programs. … It is the only mechanism we have to really peer review the quality of graduate training.”

Robert Horvitz

Some members of the ACD weren’t buying it. Biologist Robert Horvitz of the Massachusetts Institute of Technology in Cambridge argued that shifting funding away from R01s takes away too much autonomy from PIs. “One wants to be sure that the principal investigators, who are supposed to be doing the research, continue to have enough flexibility to be able to support the research they want to do,” he said. Taking away that flexibility, he argued, could reduce research productivity.

Other ACD members, including Haile Debas, director of the University of California Global Health Institute in San Francisco, were more supportive of the recommendations. While such a shift would be bold, Debas said, “you can also do harm by doing nothing.” He proposed that NIH launch experiments to determine whether graduate students who get industry experience during their traineeships, for example, go on to have successful careers in industry.

Judith Bond, incoming president of the Federation of American Societies for Experimental Biology (FASEB) and a biochemist at Pennsylvania State University, Hershey, also disagrees with this recommendation, saying in an interview with Science Careers that “oversight of student training should be left to the universities, not the federal government.” Bond is not a member of the ACD.

Upping postdoc pay

The situation is equally grim, if not grimmer, for postdoctoral researchers, Tilghman and her colleagues argue in the report. The report recommends that more postdocs be supported by training grants and fewer by PIs’ research grants, with the total number of NIH-supported postdocs remaining constant or perhaps decreasing.

One way of reducing the number of postdocs—and decreasing the intense competition for jobs—would be to increase postdoc salaries from $39,264 to $42,000 and provide benefits equal to those of employees at their institutions, the report says. It also recommends that NIH mandate a 4% raise before the third year of postdoctoral work and a 6% raise before the seventh. The idea, Tilghman said, would be to motivate PIs to help their postdocs move as quickly as possible into jobs rather than toil away as a postdoc.

“One of the things the committee really grappled with is: To what degree are these [people] trainees … and to what extent are they worker bees who are the producers of the research in our lab?” Tilghman said. The working group felt strongly, she said, that emphasizing training is the best way to produce well-trained future PIs.

Cato Laurencin, an ACD member and CEO of the Connecticut Institute for Clinical and Translational Science in Farmington, agreed with the working group’s postdoc recommendations. “We’ve gotten into a mindset where postdocs last 5, 6, 7 years,” he said. “After 5 or 6 years of Ph.D. training, people are spending their careers in training. I am very concerned about that.”

Bond, too, agreed with the postdoc salary recommendation. “In general, FASEB is in favor of increasing postdoc salaries. … Postdocs are essential to work in the lab, and they should be paid a living wage,” she said.

But ACD member Horvitz was skeptical. The money to raise postdoc salaries “has to come from somewhere,” he said, and given NIH’s current budget woes, it might be impractical to raise postdoc pay. If PIs were forced to make do with fewer (but better paid) postdocs, he argued, lab productivity would probably decline.

Improving the staff scientist position

One way to provide more job opportunities for Ph.D. scientists would be to increase the number and stature of staff scientists in university labs. (See “A Hidden Academic Workforce.”) One way this could be accomplished would be to have universities shoulder a larger percentage of researcher salaries than most currently do, Tilghman said. That would make the positions more stable and less vulnerable to changes in NIH budgets and competitive grant renewals.

Those salaries should also be increased, the report argues, to be commensurate with the training levels of staff scientists and their value to the lab. If the number of postdocs drops as a result of raising postdoc salaries, staff scientists could fill the gap, which should help attract talented scientists to these positions.

Finally, Tilghman recommended that NIH award grants preferentially to PIs who employ staff scientists. “When I think about the tradeoff of a graduate student for a staff scientist who is already extremely well trained, who can work without constant supervision, who can really help train the younger people in the laboratory, … I actually think we’ll be more productive,” she said.

Tough times afford opportunity

Two of the key recommendations of the report—shifting funding away from R01s to create more training grants and increasing postdoc pay and benefits—met with resistance from members of the ACD. Yet Tilghman believes that these recommendations will gain more traction with NIH leadership than when she proposed similar reforms in 1998. Times are much tougher now, she said, which makes it easier to make larger changes. “The only time when it’s going to be possible to make hard decisions that would … have a long-term, beneficial effect on all the players in the biomedical workforce is … during tough times,” Tilghman said. “Doing nothing, in my view, is not an option.”

NIH Director Francis Collins said that the ACD appeared generally supportive of the report and that NIH would collect more data, build models, and run pilot programs so that they can better predict the impact of implementing the report’s recommendations. “I do think the NIH will want to take some action here,” he said. “I like the idea of doing some experiments to get some early indications of whether the interventions are achieving the goals that we hope for. It would be a very good thing before we do something more systematically disruptive in ways that we didn’t intend.”

Michael Price is a staff writer for Science Careers.http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/201206_22/caredit.a1200069

A Hidden Academic Workforce

 By Siri Carpenter

June 08, 2012

The staff scientist role is not just a boon for universities. It is also a career destination for some of the tens of thousands of highly trained researchers who wish to remain in or close to academic research—a cadre that’s far too large for the number of available faculty positions.

On university campuses, students, postdocs, and professors are so ubiquitous that it would be easy not to notice the other Ph.D.-level professional scientists—often dubbed staff scientists—who roam the halls. Some of them work as lab managers or project directors; others direct or help operate university core facilities. Despite their low profile, staff scientists are numerous and make a major contribution to their institutions.

At the University of Wisconsin (UW), Madison, between 700 and 800 members of the academic staff are Ph.D.-level scientists, estimates Heather Daniels, chair of the university’s Academic Staff Executive Committee. For comparison, the university has 2137 faculty members in all disciplines, with a number of staff scientists comparable to the number of science faculty members. The same may well be true at other, similar universities.

Many staff scientists write grants. In fact, UW Madison staff scientists brought in $120 million to the university last year, out of a total grant portfolio worth just over $1 billion. When you include grants on which staff scientists serve as co–principal investigators (co-PIs), that figure rises to $240 million.

The staff scientist role is not just a boon for universities. It is also a career destination for some of the tens of thousands of highly trained researchers who wish to remain in or close to academic research—a cadre that’s far too large for the number of available faculty positions.

Such positions typically pay better than postdocs and sometimes about as well as assistant professor positions. At UW Madison, the minimum starting salary for an academic staff scientist is $40,055. Unfortunately, there is no mechanism for annual merit-based increases, so staff scientists typically receive raises only when the state pay plan calls for an across-the-board increase. As a result, “the longer you’re here, the more your salary tends to fall behind,” Daniels says.

Most staff scientists are grant supported, a fact that, in addition to creating job insecurity, limits the ability of staff-scientist PIs to perpetuate their own careers. According to federal rules, researchers are not allowed to use time supported by federal grants to write grants. Government auditors have interpreted the rules to stipulate that grant-funded researchers are on the clock 100% of the time, Daniels says, even if they work much longer weeks than the 40-hour standard. So whenever a staff scientist’s salary comes entirely from federal grants, federal grant writing is effectively forbidden. The solution, usually, is to find non-federal money to pay part of that salary. “It’s been a struggle for a lot of universities,” she says, “to come up with non-grant dollars to give folks time to write grants. I think researchers are feeling really constrained by this.”

On the positive side, the role of staff scientist has several benefits. Staff scientists typically travel less, work fewer nights and weekends, spend less time writing grants, and have fewer administrative responsibilities than faculty members. They seldom have formal teaching responsibilities, which some staff scientists consider a perk. Much more than postdocs, staff scientists tend to have a hand in more than one scientific project at a time.

A nonfaculty career path can also provide geographic stability, notes Alexander Pico, a staff research scientist at the Gladstone Institutes, a group of research institutes closely affiliated with the University of California, San Francisco (UCSF). “If you go with the traditional route, you have to move a lot. You have to prove yourself as a Ph.D. student in one institution, then prove yourself in another as a postdoc, and then you’re expected to continue that as faculty, proving yourself in one environment after another before you get tenure,” Pico says. “The staff position is a little more stable. I really like the working culture at Gladstone, and I would really hate to have to leave just because it’s a convention in the career path.”

Here, we profile a sampling of staff scientists from two universities—UW Madison and UCSF—who have foregone the tenure track while remaining deeply rooted in university life.

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