Buys boost big pharma staff numbers as axe continues to fall in some regions

Analysis

While job cuts announced by large cap pharma companies, usually in the thousands, tend to get top news billing in the regions where they hit, the actual picture of total employee numbers for the industry is much more complex than the seemingly constant downsizing of staff.

Although the world’s biggest drug makers continued to announce swingeing restructuring programmes, most notably at Merck & Co, the analysis below shows that big pharma employee numbers actually rose last year, albeit at a modest 3%, as five of the top pharma groups added to their numbers. This small increase was fuelled by acquisitions, most notably Sanofi's $20bn acquisition of Genzyme in April 2011 and Johnson & Johnson's $21bn move on Synthes, as well as Novartis' final consolidation of Alcon.

Underlying trends

The numbers below are extracted by EvaluatePharma from annual reports – the few that break down the figures down beyond the top line by geography and by department illustrate the trends that are being seen across the industry right now.

For example GlaxoSmithKline, which has not indulged in a bloating mega-acquisition since the merger that created it in 2000, has been shedding staff gradually over the last decade. The UK pharma giant’s employee breakdown reveals a predictable picture – US staff have fallen substantially with a 29% decline in numbers since 2006, to 17,555, while Europe-based employees dipped by 13%, to 39,910. In emerging markets, staff numbers have grown.

Departmentally since 2006 the company says it has maintained employee numbers globally in selling, administration and manufacturing, with only R&D staff declining notably. Having employed almost 16,000 scientists in 2006, by the end of last year that number had dropped to 12,687.

Similarly Sanofi, before gaining Genzyme’s employees last year, had been trimming R&D staff, with 11% of employees disappearing from that department between 2009 and 2010, to 16,983. At the same time, its sales force also shrank. Geographical information reveals that US staff numbers had also been in decline, before the Genzyme move last year.

So while the data below show that big pharma became a bigger employer last year, largely as a result of acquisitions, underlying trends are likely to reveal shrinking western sales forces with expansion in emerging territories, while the number of scientists on the payroll have fallen.

Big pharma employee numbers - year end
2006 2007 2008 2009 2010 2011 10-11% 06-11%
Novartis 100,735 98,200 96,717 99,834 119,418 123,686 4% 23%
Johnson & Johnson 122,200 119,200 118,700 115,000 114,000 117,900 3% (4%)
Sanofi 100,289 99,495 98,213 104,867 101,575 113,719 12% 13%
Pfizer 98,000 86,600 81,800 116,500 110,600 103,700 (6%) 6%
GlaxoSmithKline 102,695 103,483 99,003 99,913 96,461 97,389 1% (5%)
Abbott Laboratories 66,663 68,000 69,000 73,000 90,000 91,000 1% 37%
Merck & Co 60,000 59,800 55,200 100,000 94,000 86,000 (9%) 43%
Roche 74,372 78,604 80,080 81,507 80,653 80,129 (1%) 8%
AstraZeneca 66,800 67,400 65,000 62,700 61,100 57,200 (6%) (14%)
Eli Lilly 41,500 40,600 40,450 40,360 38,350 38,080 (1%) (8%)
Bristol-Myers Squibb 43,000 42,000 35,000 28,000 27,000 27,000 0% (37%)
Wyeth 50,060 50,527 47,426 - - -
Schering-Plough 33,500 55,000 51,000 - - -
Total 959,814 968,909 937,589 921,681 933,157 935,803 0% (3%)
Annual change 9,095 (31,320) (15,908) 11,476 2,646

One plus one equals many

Although Glaxo may have shied away mega mergers Novartis’s ability to hang onto the title of the industry's biggest employer was down to the integration of eye care giant Alcon, with employee numbers up 4% last year.

Joining Novartis as one of the few companies to significantly add to staff numbers was Sanofi, which added an impressive 12% to its headcount with Genzyme and Johnson & Johnson, with a 3% increase (Sanofi finally snags Genzyme with clever CVRs, February 16, 2011).

Acquisitions may have swelled the ranks at Novartis and Sanofi, but the job cuts at Merck last year, the biggest in the industry, show the knock-on effects of mergers.

The success of mergers are often measured on the synergies the new company can extract and Merck announced in July that it would be axing a further 13,000 jobs by 2015 to reduce the costs associated with joining up with Schering-Plough (Merck fails to excite market with job cuts, August 1, 2011).

The acquisition of Schering-Plough has resulted in Merck having the biggest growth in employee numbers over the last five years, indicating that there could still be more job cuts to come.

Pfizer, the other participant in the mega merger frenzy that struck the industry in 2009, is also trying to lose the additional staff gained from welcoming Wyeth into its fold. Since the acquisition the group has steadily shed employee numbers, with this year’s 6% decline marking one of the biggest falls in jobs, compared with 5% in the last two years.

Mind the gap

As well as cutting costs from merging, the effect of the patent cliff has continued to be felt on staffing, with the companies announcing some of the biggest job losses preparing themselves for some of the biggest patent expiries.

AstraZeneca, which cut 6% of its staff last year, is trying to save costs ahead of the loss of blockbusters Seroquel this year, Nexium in 2014 and eventually Crestor, all of which will mean big cuts to the sales forces that support these giants.

Pfizer is also widely known to have handed out pink slips as part of its efforts to offset the loss of Lipitor in August.

So while job numbers in the industry last year may have broadly held up approaching patent expiries, a continued focus on cost cutting and reduced spending on R&D means many more positions are likely to disappear in the coming years.

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