The pharmaceutical market giveth and it taketh away.
And reading the tea leaves of some key industry analysts, North Carolina is in line to experience both phenomena.
Just over a week ago, before British media reported that GlaxoSmithKline is in line to reduce its R&D workforce again by some 4,000 people, European analysts with Morgan Stanley issued a report suggesting Big Pharma needs to do just that, and in-license more of its business activity -- especially drug discovery.
That could be bad news for GSK scientists at its U.S. headquarters in Research Triangle Park. But it could be a good exit or partnering omen for many of North Carolina's small bioscience companies -- some of which are led and staffed by refugees from previous big-pharma cutbacks.
Seven Morgan Stanley experts -- two M.D.s, three Ph.D.s, a CFA and a CPA -- issued the suggestion in the report, Pharmaceuticals: Exit Research and Create Value.
They reported that they still see "significant value in pharma" as it "withdraws from most internal small molecule research and reallocates capital to in-licensing and other non-pharma assets."
But increasing pressure on Big Pharma from generics and R&D management changes lead these analysts to expect cutbacks in internal R&D spending "after a decade of dismal internal R&D returns."
They noted that more than one-third of the R&D spending by Big Pharma is in pre-phase II research, "where the probability of reaching the market is less than 10 percent."
"Reinvestment of internal research savings into in-licensing will yield three times the likely return, we calculate," the analysts wrote. "Under in-licensing deals, downside risk for pharma companies is currently materially lower than for internally developed drugs."
GSK has not made public any specific R&D cutback plans.