employment outlook M IDWEST BIO R ESEARCH
OPPORTUNITIES FOR 2010 AND BEYOND
FOCUSED
At Midwest BioResearch, Schlosser (left) and Sabrina Morton (far right), vice president of business operations, visit with a client.
EMPOWERED ENTREPRENEURS Downsized out of big companies, scientists are creating satisfying job opportunities in THEIR OWN FIRMS SUSAN J. AINSWORTH, C&EN DALLAS
BACK WHEN Pfizer agreed to buy Pharma-
cia in 2002, Mike Schlosser found out that he would lose his job as head of the preclinical safety evaluation group at Pharmacia’s Chicago R&D site. Up to that point in his career, he had worked for seven different companies, having made job changes driven mostly by mergers and acquisitions. Faced with his next career move, he wasn’t eager to go back to yet another big pharma job. As a manager, he had just finished the brutal task of laying off 100 people. “And it wasn’t easy to see some-
thing that you helped build be torn apart,” Schlosser says. Although he was offered a couple of jobs on the East Coast, “big pharma was just not something I wanted to go back to at that time,” he says. Instead, he saw the change as an opportunity to do something he had always wanted to do—start a company. So in 2003, he founded Skokie, Ill.-based Midwest BioResearch, a contract research organization (CRO) focused on small- and largemolecule bioanalysis, genetic toxicology testing, and consulting. WWW.CEN-ONLINE.ORG
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Although many people dream about starting a business at some point in their lifetimes, those laid off from industrial jobs may have an added impetus to turn the dream into reality. The unemployed have less to risk with no lucrative job in hand and, in poor economic times, few positions for which to apply. Also, they often benefit from severance packages or other perks that support them as they make the difficult transition from employee to business owner. That was, in fact, the case for Schlosser,
ENTERPRISING ENTREPRENEURS
Transforming A Passion Into A Business The massive job cuts in the pharmaceutical and chemical industries in recent years have left many chemists locked out of their chosen profession—at least for now. Rather than remaining helplessly unemployed, some are turning to hobbies or extracurricular interests, hoping to convert them into profitable businesses. That has been the antidote for the shock and anger that Gary Cain felt when he learned on Halloween in 2007 that he would be affected by compa-
nywide layoffs at GlaxoSmithKline. Despite a 25-year career of solid contributions and positive annual performance reviews, he faced his second chemistry job layoff in six years. And as he suspected, he was unable to find another organic chemistry position in the Wilmington, Del., area, where he wanted to stay. Described by friends and colleagues as a prolific writer with an offbeat, dry sense of humor, Cain tried his hand at freelance writing before deciding to launch Humor
Volcano, a general news satire website, in May 2009. He has been able to generate income from the advertising he sells on the site and from sales of a new e-book, but he has yet to turn a profit. “Fortunately, my readership is growing—slowly but steadily,” he says. Cain writes all the website content, which he gleans from general news headlines, as well as from his own experiences, and he handles all the site-building tasks, which he says he had to learn from scratch. The job allows him
Having worked for several different companies, Schlosser had witnessed “different ways to do projects and different management styles,” he says. “I was able to understand what works and what doesn’t work. I knew it would be possible to start a business; it was just a matter of pulling all the resources together to make it happen.” Taking stock of a wealth of talented people who had been laid off also prompted Brent Schludecker to start Midwest Compliance Laboratories (MC Labs) in late 2008. Along with many others, he lost his job at Pfizer when it shut down its Exubera inhaled-insulin operation in Terre Haute, Ind., in February 2008. Surrounded by many unemployed people DREAM JOB with rich drug industry experience, Schludecker founded “I knew this would be a great time to Midwest Compliance Laboratories after losing launch a service-type company,” he his job at Pfizer when says. “I knew I had to strike while the the company shuttered iron was hot.” its inhaled-insulin That wasn’t his first move, howevoperation in 2008. er. After losing his job at Pfizer, Schludecker accepted a job as a project manager at Baxter Pharmaceutical operations. Those resources helped launch Solutions in Bloomington, Ind. “Almost as Midwest BioResearch, which quickly blossoon as I started working there, I knew the somed into an acquisition target; WIL position probably wasn’t going to be a very Research Laboratories, a nonclinical safety good fit for me,” says Schludecker, who has evaluation CRO, purchased the firm in Feba master’s degree in analytical chemistry. ruary 2009. “It wasn’t exactly what I was looking for.” It helped that Schlosser had manageHe had already had his fill of corporate ment, as well as laboratory, experience. jobs, having been with Eli Lilly & Co. for 10 MIDWEST COMPLIANCE LABORATORIES
who received a sizable severance package and was also able to get first rights to buy some “state-of-the-art equipment out of Pharmacia’s Chicago site for just 10 to 20 cents on the dollar,” he says. Schlosser also had the advantage of being able to bring on board topnotch scientists who had also lost their jobs when Pfizer shut down Pharmacia’s local
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years before his job was eliminated, leading him to his five-year stint at Pfizer. During his two-and-a-half-hour round-trip commute to Baxter each day, “I had plenty of time to think about what I really wanted to do,” he says. Schludecker began meeting with four other former Pfizer colleagues to share his idea of starting a company to do contract analytical and microbiological qualitycontrol laboratory testing for companies in the pharmaceutical and food manufacturing industries. The five of them signed on as founders, each with 20-plus years of experience working in quality-control labs. That expertise served as the cornerstone of a business plan that Schludecker put together with the help of the Terre Haute Economic Development Corp. and the Center for Business Support & Economic Innovation at Indiana State University. DRAWING FROM her work experiences at
four different semiconductor firms, Karen Reinhardt felt equipped to start a business after being laid off from Novellus Systems in 2005. That same year, she founded San Jose, Calif.-based Cameo Consulting, now a six-employee contract engineering company. Cameo started out providing technical support and marketing services to start-up semiconductor equipment and processing firms, but now, responding to growing market needs, it focuses on turnkey silicon wafer solar lines. Working in business development roles
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EMPLOYMENT OUTLOOK
with previous employers, “I’d seen so many companies trying to license or sell their technology, but most of them would come in totally unprepared,” says Reinhardt, who has a master’s degree in inorganic chemistry. “I felt so sorry for them because they had invested their life savings in a company that didn’t have a chance. The owners did not do their homework on the value or the timing of when new technology or materials should be installed,” she says. “I knew I could do better with all of that.” Unlike Reinhardt, Eugene Miller was unsure about his ability to start a business, but he was able to use his experience in chemical manufacturing to do just that in 1981. Miller had been working for Textilana in Hawthorne, Calif., when Henkel acquired it and began cutting employees, he says. “I left just before they could can me,” he says. About that time, he met up with Bill Frost, “a financial genius and great salesman” who had a small business refining reclaimed hydraulic fluids and was looking for someone with Miller’s expertise to help him expand into manufacturing, Miller says. Together, they took a risk and started surfactants producer Chemron in Paso Robles, Calif.
CR EDIT
his period of unemployment. After being laid off from spectrometer maker Ahura Scientific in January 2009, the then-39-year-old Ph.D. analytical chemist found that he was “overqualified for a lot of the lab jobs that were available.” Within a couple of weeks of losing his job, he decided to do something he’d long dreamed of doing—setting up a business to make and sell his own pottery pieces. In addition to indulging a passion he developed in high school, Haigh has been able to apply his knowledge of chemistry to
his work, which is done around a homemade kiln behind his Londonderry, N.H., home.
JENNIFER HAIGH
to “take advantage of what I’ve already gained as a career chemist: the ability to examine and make sense of information, to think logically, to formulate ideas, to solve problems, to make plans, and to execute them to reach a goal,” says Cain, who has a Ph.D. in organic chemistry. Although he misses working in chemistry, Cain says he enjoys his new role. “I’m no longer stuck dealing with troublesome facts and pesky reality. I can just make stuff up, and generally, the wilder the better. So it is great fun.” Like Cain, Paul Haigh found a way to make the best of
Haigh
Then a 48-year-old Ph.D. chemist, Miller didn’t see any other options that wouldn’t involve moving his family of eight to another part of the country. “We were in the midst of a recession, and there were not that many jobs anywhere,” he says. “The choice to start a business was almost an easy one, because what else was I going to do?” ALTHOUGH MAKING the decision to
found a business was reasonably straightforward for Miller, the process of starting and running it was not, he says. In fact, the entrepreneurs interviewed by C&EN all say they faced many start-up challenges, including finding ways to fund their new ventures. When Schlosser started out, he was able to infuse some capital into Midwest BioResearch by cashing in “a good part of the Pfizer stock” he received as part of his severance package. In addition, the company’s six partners took out a low-interest, smallbusiness loan granted by the Illinois Small Business Development Center through Chicago-based Harris Bank. Schlosser put up his house as collateral on the loan. “We all risked quite a bit,” he says. “Early on, we
“We can no longer depend on large companies to support us throughout our careers.” WWW.CEN-ONLINE.ORG
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Still, Haigh was bringing in considerably less pay, prompting him to continue looking for a job in chemistry. Last summer, after running his pottery business for eight months, he accepted a job as a researcher with Massachusetts Institute of Technology’s Lincoln Laboratory. Haigh says he has no resentment about being laid off by Ahura. On the contrary, “it’s one of the best things that could have happened to me,” he says. “People always talk about getting out of the rat race,” he says. “I got forced out of the rat race for a while, and I found that I really enjoyed it.”
experienced some uncomfortable times that kept me wondering if we had done the right thing.” Not surprisingly, some aspiring entrepreneurs prefer to avoid friends-andfamily financing and find investors to back them instead. That was the case with Jack Baldwin, who in 1993 at age 58 had accepted an early retirement package from Merck & Co., which was in the midst of a downsizing effort. Networking with venture capital sources, he and Merck colleague Jack Chabala secured funding from San Diego-based venture capital firm Avalon Ventures to start combinatorial chemistry firm Pharmacopeia in Princeton, N.J. Like Baldwin and Chabala, the Avalon team recognized the potential of combinatorial chemistry and high-throughput screening for accelerating the drug discovery process. Baldwin has since founded several other companies, mostly funded by venture capital sources. However, he acknowledges that raising capital today is more difficult than it has been for many years. The level of funding raised by venture capital firms in 2009 was the lowest in a decade, “requiring these firms to be more selective in their investment decisions,” according to Glen Giovannetti, the global biotechnology leader of consulting firm Ernst & Young’s life sciences practice. Noting that “the era of easy money is over,” Giovannetti encourages aspiring business owners to broaden their search for funding beyond just venture capital to
include nontraditional sources such as government grants and disease foundations that don’t reduce their stake in the company. Regardless of how their businesses were financed, many new business owners report that they made very little, if any, money as their companies got off the ground. For example, MC Labs didn’t turn a profit for almost a year. One of the consequences was that Schludecker and his family had to live leaner and make sacrifices such as cutting back on vacations and purchases, he says. The same was true for many of the six partners at Midwest BioResearch. Early on, they lived off their severance packages and bonuses, Schlosser says. Likewise, as Baldwin launched Pharmacopeia, he relied heavily on the early retirement package he received from Merck, which “kept the risks of starting a business to a minimum,” he says. “I had retirement benefits and continued medical coverage” that was set up to last until age 65. Securing health insurance can be a major stumbling block for new companies as owners struggle to cover themselves and their employees. Like many new firms, Midwest BioResearch simply could not afford to provide health care coverage for its employees initially. When the company finally could provide coverage, “it ate up a huge hunk of our profit, but we knew we needed it to attract top talent,” Schlosser says. Now that the company is part of WIL Research Laboratories, the company’s employees enjoy a full benefits package that includes generous health care coverage, he says. TAKING CARE of employees while keeping
a business afloat is often more challenging than first-time entrepreneurs expect it will be. Midwest BioResearch had all the usual “start-up problems,” Schlosser says. “As a service organization, we were the new kid on the block. Despite our experience and our impressive lab and equipment, it was difficult to be recognized as a viable CRO early on.” The company was able to overcome that hurdle by networking with the many contacts who knew the partners’
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ing to lay it all out on the line and make it work,” Chemron’s Miller advises. Looking back, he says, starting Chemron was “quite an adventure. I took a big chance, but it paid off.” DILIGENT After By the time Miller and his partbeing laid off, ner sold Chemron to Lubrizol in Reinhardt created a 2002, they had 150 employees and consulting plants with annual sales totaling business focused between $55 million and $60 milon solar-cell lion. At that time, they distributmanufacturing. ed $2 million to employees, which marked his “proudest moment,” he says. Today, he enjoys being in reputation in the industry and by hiring a financial position to help his children; pay marketing firm Chempetitive Group to for his 10 grandchildren to attend college; create sales brochures, articles, and “a slick and support his alma mater, Tulane Univerand informative website,” he says. sity, and a local community college, Cuesta “The pressure to be successful and not College in San Luis Obispo, Calif. “Working fail made us work extremely hard during for another company, I never would have those early years,” Schlosser says. “We put been able to do all of that,” he says. in a lot of sweat equity before we saw susSchlosser, too, has reaped rewards after tained profitability.” taking the gamble of starting Midwest At the outset, long hours and hard work BioResearch. After the company was acwere also the norm at MC Labs. The comquired, he and the other five partners were pany’s five founding employees began their able to take equity out of the company new jobs by cleaning, painting, installing and roll equity into WIL Research, which plumbing, and building office and laboraallowed them to eliminate the risk associtory space in the vacant building that the ated with business loans and recoup much company had been leasing, Schludecker of what they might have earned if they had says. “It was hard work, but we knew it was stayed in a big drug company. all going to pay dividends down the road.” Despite the pitfalls of starting a busiBaldwin, too, says he was constantly ness, Schlosser encourages the many scibusy the first year that Pharmacopeia was entists who have been laid off recently to in business. When starting out, “you’re the consider paths other than trying to return scientist, the salesman, the maintenance to big pharma. He believes there are opporguy, and you close up at night. You’re doing tunities for scientists to start businesses in everything there is to do,” he says. “You the health care field, which he believes will work long hours, you travel much more, continue to grow. but it is exciting and very fulfilling.” Schludecker shares a similar sentiment. Cameo Consulting’s Reinhardt, who “We can no longer depend on large compahas focused her business in the U.S., South nies to support us throughout our careers,” Korea, and Spain, acknowledges that she he says. “Going through school, we were has had to sacrifice family time to keep told to get good grades so we could land a her business running. Like many business job with a good company and make the best owners, she must put in “lots of unpaid possible salary. I’m not sure we can tell our time to draw up contracts, participate in kids that anymore, because we don’t know negotiations, or talk with customers who if a particular job or company will even exare checking you out,” she says. ist in six months. Even in the midst of today’s less-than“We’ve all got to think outside the box favorable economic climate, well-premore,” Schludecker says. “Like our ancespared, determined scientists can still find tors before us, we have to get off the boat opportunities to start businesses. After and chase our dreams.” Having done that, he finding the right niche, “you have to be willisn’t looking back. In his role as a president and founder of MC Labs, “I’m having the most fun I have ever had during my career.”
“Like our ancestors before us, we have to get off the boat and chase our dreams.” WWW.CEN-ONLINE.ORG
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With reporting by LINDA WANG.
