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Big Pharma job cuts could have mixed results

A paucity of new drugs, declining sales of blockbuster drug franchises and generic price erosion have seen restructuring among the world's largest pharmaceutical companies.

According to a report by news agency Reuters, a paucity of new drugs, declining sales of blockbuster drug franchises and generic price erosion have seen restructuring among the world's largest pharmaceutical companies.

Those slashing jobs include: US stent manufacturer Boston Scientific, which announced the loss of 2,300 jobs; King Pharmaceuticals revealed it would cut 520 jobs, or 20 per cent of its US work force; Swiss pharmaceutical company Novartis is shedding 240 jobs at its corporate headquarters and over 500 from its US sales force; while the EU's largest pharmaceutical firm, GlaxoSmithKline (GSK), is also reducing its sales workforce.

The two biggest companies in pharmaceuticals and biotech, respectively, Pfizer and Amgen, are in the process of major restructuring, including massive workforce reductions. Pfizer announced earlier in 2007 that it was to cut 10,000 jobs, as Lipitor (atorvastatin), the world's best selling drug goes off patent in 2010.

Anglo-Swedish AstraZeneca (AZ) announced in July 2007 that it would shed 7,600 jobs, while US device manufacturer Medtronic revealed 500 job cuts from its cardiac rhythm management business.

BMO Capital Markets analysts told Reuters that the downsizing trend was encouraging, as most pharmaceutical companies are far too big and cannot respond to changes in the market rapidly enough. As a result, say the analysts, the companies will be in much better position to capture better economics. They went on to warn that further cuts will be coming.

JPMorgan analysts were worried that the job cuts could impact on research and development, sales support, pipeline growth prospects and short- and long-term competitiveness.

However, international executive employment consultancy firm Challenger, Gray & Christmas said it did not believe that the scale of cutbacks were anything like those seen in the housing or mortgage banking sector, as novel biotechnology products will keep the industry healthy.

The company added that although more job cuts were on their way, many of the thousands who find themselves unemployed would find work outside Big Pharma, as skilled sales and marketing staff were always in demand.

30th September 2008

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