The proposal and counter proposals have been submitted and reviewed. The employee protests roll on, although partly muted by legal disputes and management negotiations. Now though, it is decided. The shutters will come down at Merck Serono in Geneva. An estimated workforce of 1250 people will be affected, their lives driven in new directions.
The industry has stood witness to some fairly substantial reorganisations in recent times. Most of the large pharmaceutical companies have announced significant reduction in staff with companies typically trimming between 5-15% of total workforce. We’ve seen reallocation of work to low-cost centres, regional reprioritisation, cutbacks in R&D, and sales reps axed in considerable numbers. Yet, for some reason, the Merck Serono closure in particular has really gained some international resonance.
Perhaps it is the concentration of the change. The fact that all those affected are based in one place, working side by side; friends, colleagues, even relatives. It could be that the original company (Serono) was a darling of the biotechnology industry; a European trailblazer. The company was, for a long time, a beacon of entrepreneurial spirit and scientific innovation. Its sale to Merck in 2006 was a surprise, but it seems its total dissolution in Geneva comes as a greater surprise to those both internal and external to the firm.
At the beginning of the year, Liftstream, as a recruitment company, was frequently receiving enquiries from Merck Serono staff. They all knew something was coming, particularly in the R&D areas, where new leadership and a different outlook were beginning to take hold. The truth is, the investor community wanted it. They felt that Merck needed to cut costs particularly in the wake of a Millipore acquisition. The company has been largely ineffective in getting new products to market from its $13.3bn acquisition of Serono and it needed to trim back. Yet, few knew the impact of the management’s decision.
The cultures have not exactly meshed together. The fluid and entrepreneurial values of Serono and its leader (Ernesto Bertarelli), were met by structure and process that opposed its cultural DNA. But now the power heads back to Darmstadt, Merck’s head office, and the Serono legacy is diminished beyond recognition. Those people who gave their best ideas and hardest efforts to make Serono the European biotech talisman are forced into deciding their futures. They need to adapt to the new direction and ethos of the company and make their career decisions in full knowledge of this new outlook.
To be fair, Merck has offered roles elsewhere in the organisation, perhaps Darmstadt or the US, although Merck has announced in recent days 1100 jobs are to be cut in Germany also. It suggests some 500 employees will be saved from redundancy. But how real are these options?
There are many factors that will make this a difficult offer to accept for the 500 supposed lucky ones. Uprooting and leaving the rather unique environment of Geneva would mean some quite drastic changes to lifestyle. Beyond the nuances of lifestyle, there are some more basic considerations. Firstly, looking towards the US, employees in Europe are likely to be moving under the US visa L1, which allows internal moves within organisations. The downside of this is that it imposes working restrictions on a trailing spouse or partner. While relocating employees may enjoy continuity of employment, their spouse or partner does not. Looking beyond the obvious immediate economic impact of this, longer-term, it is likely to damage the career trajectory of a partner or spouse, meaning it can only be done where both parties agree it is financially beneficial overall.
The second consideration is schooling. Anyone who has gone through relocation will know that finding good schools for children can be very difficult. Ensuring adequate provision of education for their children is the reason so many relocating executives look for considerable financial support from their employers. School places, however, are limited and when several hundred new people flow into an area, they are near impossible to secure. The upshot – if there are no good schools, relocation is unlikely to prove a possibility for families.
One of the other aspects to consider is the subject of trust. If you have been employed by the same company for a substantial amount of time and suddenly your employer decides to make you and a great many of your colleagues redundant, then the trust between you and your employer diminishes. In some cases, it disappears entirely. If a life-line is then subsequently provided to you, the degree to which you feel you can trust this employer becomes a big factor. It is especially pertinent when you are considering the option of relocating your entire family to another part of Europe or the world. The question of how long it might be before you are faced with a similar predicament continually resurfaces.
But we need only to look back as far as 2011 to see that, by and large, people find a way. The closure of the Pfizer site in Sandwich, UK, threatened some 2400+ peoples’ livelihoods. In Sandwich, unlike Geneva, there really were no other options for employment in the life sciences sector. Employees faced the real prospect of relocation just to find work. The isolation was profound. Yet, the innovative minds of these people should provide inspiration to those at Merck Serono. Granted, it took place with some corporate and government intervention, but the ex-Pfizer site now hosts some new innovative businesses who have started from scratch. Others have migrated to companies in the Canterbury region and, allowing for the possibility that the county of Kent can prevent the brain-drain occurring, the future of a Kent biotech cluster is a very real possibility. Others have found their way into independent consulting and now work remotely for some of Europe’s pharma and biotech companies with brighter prospects. Some have stayed on under new arrangements or relocations.
It is evidence, were it needed, that the demand for high calibre skills and experience in the life sciences industry remains high. Of course, when 1000 people hit the market all at once, it takes time to work out where they will all go. But solutions will be found and this is already being seen in the recent announcement by Quintiles that they will offer 100 jobs. Index Ventures has also promised to explore all the options for spin-offs or spin-outs with Merck. One such spin-out has been announced by Merck Serono; Prexton Therapeutics. Merck has also announced the spin-out of a service company in the biomarker informatics space, Quartz Bio, with Merck Serono intending to employ the services of the new company over the next 2 years at least. While the relocation and retention of people remains a doubtful outcome for so many of these employees, they will find ways to adapt and overcome this challenge.