PPD Layoffs Part of Challenges in the Pharma Industry
America’s pharma industry is continuing to shed more jobs each passing day. Wilmington, North Carolina-based contract research organization (CRO) Pharmaceutical Product Development, LLC (PPD) is cutting an undisclosed number of jobs in its hometown and in The Research Triangle (an area of North Carolina), in what seems like a cost-cutting move.
The giant CRO provides contract-based services—such as clinical research, pharmaceutical development, and clinical trial management—to big and small pharma industry players.
The PPD layoffs include about half of the employees its Human Resources (HR) department. The company has not revealed much about the nature or the exact number of the job cuts.
The PPD job cuts come as the company positions itself for growth in the wake of numerous major contracts it has received, including the most recent one, which is for AIDS-related clinical trials with the Division of AIDS (DAIDS), National Institute of Allergy and Infectious Diseases (NIAID), which is part of the National Institutes of Health (NIH).
The company has recently won a number of accolades, being credited as one of the best contract research organizations in the world. PPD’s growing industry relevance has piqued the interest of a number of potential acquirers. Rumors circulated earlier this year that one of the largest independent laboratory companies, Laboratory Corporation of America Holdings (LabCorp), wished to buy the company for over $8.0 billion. PPD currently boasts an estimated worth of $9.0 billion.
Despite all odds in its favor, the holistic challenges in the pharma industry remain a hitch for PPD, likely forcing it to consider cost savings wherever possible.
PPD Layoffs Follow Other CRO Layoffs in 2017
The CRO industry is dynamically changing as more pharma companies consolidate with these service providers. Pharmaceutical and biotechnology companies typically hire CROs for their clinical trial management services. In turn, they pay them a fee for the term of a contract.
It is an expense that Big Pharma wants to curtail. For this, they either turn to mergers with CROs, thus erasing competition in the industry, or they put limits on the services that they outsource, and avoid utilizing a CRO’s full-service capabilities. That sometimes makes it difficult for a CRO to reach the bare minimum of revenue for economies of scale to work.
These and similar challenges are paving the way for repeated job cuts in the industry. We’ve seen a number of CRO layoffs this year, prior to the PPD layoffs.
Take the example of Parexel International Corporation, a Waltham, Massachusetts-based company that is one of the largest CROs in the state. The service provider cut about 1,100 to 1,200 jobs this summer. The Parexel layoffs in 2017 were owed to the company’s efforts to consolidate its global operations.
Similarly, Covance, a Princeton, New Jersey-based CRO, turned to cost-cutting earlier this year amid mounting sales pressure. The Covance layoffs in 2017 affected more than 100 staffers.
PPD has said that its layoffs are part of its routine practice to “adjust and deploy our global workforce to best meet our clients’ needs and respond to marketplace conditions.”
PPD currently employs a global workforce of about 20,000 employees, at 89 offices in 47 countries around the globe. However, it is the U.S.-based workforce which is being affected in the current round of PPD job cuts.
“PPD confirms making layoffs, notes ‘hundreds of jobs’ are available,” WRAL TechWire, November 6, 2017.
“PPD Awarded NIH Contract for Clinical Research Support Services,” Pharmaceutical Product Development, LLC, October 31, 2017.
“Exclusive: LabCorp explores acquisition of clinical trials firm PPD – sources,” Reuters, February 3, 2017.
“Three Challenges to CRO Success,” PharmExec.com, June 1, 2002
“And So It Begins: Covance Cuts 100+ Employees in Shut Down,” BioSpace, April 27, 2017.
“ Waltham-based Parexel discloses major layoffs,” Boston Business Journal, May 9, 2017.