Mid-tier players make the most efficient employers

Analysis

As big pharma struggled with the delicate balance between spending and revenue, mid-cap speciality and big biotech groups surged ahead and are now firmly established as having the most efficient businesses in biopharma.

Look no further than EvaluatePharma’s annual jobs report which shows Gilead Sciences, Celgene and Shire way ahead of their larger peers in sales generated per employee. Not only that, but Gilead is – in absolute terms – among the top 10 midcap hirers of the past five years.

Speciality players bulking up through M&A is another trend, though not many of these companies’ new employees will survive post-takeover “rationalisation”. It could also be argued that the likes of Gilead and Celgene have less diversified portfolios than big pharma, which puts their employment efficiency at risk if revenues slip.

For now, however, Gilead stands way ahead of the competition, with each of its 7,000 full-time employees accounting for the generation of a massive $3.5m of 2014 revenue, the report finds. There is one main reason behind this: Gilead’s hep C drugs Sovaldi and Harvoni, which are among the industry’s highest-margin products, and enjoyed possibly the fastest-ever post-launch sales trajectories ever.

Top 10 companies by revenue per employee
2014 headcount Sales ($m) Sales/employee ($m)
Gilead Sciences 7,000 24,474 3.50
Celgene 6,012 7,564 1.26
Shire 5,016 5,830 1.16
Biogen 7,550 8,203 1.09
Amgen 17,900 19,327 1.08
Alexion Pharmaceuticals 2,273 2,234 0.98
Pfizer 78,300 48,648 0.62
Actavis (now Allergan) 21,600 13,062 0.60
Merck & Co 70,000 42,237 0.60
Johnson & Johnson 126,500 74,331 0.59
Source: EvaluatePharma

The highest-placed big pharma company is Pfizer, something that might be unexpected given its historic struggles as one of the world’s biggest healthcare groups. Still, a swathe of job cuts, estimated at 51,000 employees over the past seven years, clearly helped redress the balance, and greater efficiency is the result.

This particular development – the amalgamation of multiple companies resulting in an immediate swelling of employee numbers before a broad job cull – is likely to be reflected in the not too distant future among the industry’s speciality players.

At present the likes of Actavis, Valeant, Mylan and Teva Pharmaceutical Industries stand among midcap pharma’s biggest hirers, thought this hardly represents the hiring of staff in the traditional sense, instead largely reflecting the numerical addition of staff by virtue of M&A transactions (Speciality players define M&A as big pharma seeks focus, May 26, 2015).

As everyone knows, nowhere has M&A been more fevered of late than among the speciality players. Recently Teva has been fighting to buy Mylan, which itself is trying to buy Perrigo, the acquirer of what remained of Elan; a little earlier Actavis had bought Allergan and Forest Labs (the acquirer has now been renamed Allergan), and Valeant bought Salix and Bausch + Lomb.

Bayer, too, benefited from the addition to its payroll of staff from Merck & Co’s consumer care business, acquired last year. Some of the most active hirers of people in an organic way in 2014 have been Baxter, Novo Nordisk and Celgene, with employees added on the back of product launches.

Biggest hirers of 2014 (excluding big pharma)
By number of staff added  Staff added 2014 headcount
Bayer 5,700 118,900
Baxter  5,000 66,000
Mylan 5,000 25,000
Novo Nordisk 3,014 41,450
Actavis (now Allergan) 2,400 21,600
Source: EvaluatePharma. For the full table please see the report  (LINK)

Beyond these shifts in the middle order of biopharma, the top ranking of the industry’s biggest players reveals barely any differences relative to last year (Big pharma becomes a smaller employer as biotech booms, June 18, 2014).

Just three big pharma companies stand out as having undergone significant headcount changes during the past year: Merck & Co, Bristol-Myers Squibb and AstraZeneca. The last of these is unusual: its headcount actually rose last year, by an impressive 12%, or 6,000 employees. 

That said, relative to company size there is no doubt that it is the sector’s slightly smaller players that are now leading the charge in terms of job creation.

For our full report, which includes:
• The biggest employers outside big pharma
• The sector’s biggest hirers last year
• The sector’s biggest hirers over the past five years
• The sectors biggest hirers over the past 10 years
please click here: http://info.evaluategroup.com/epv-pharma-job-numbers-epv.html

Source: EvaluatePharma

To contact the writers of this story email Jacob Plieth or Edwin Elmhirst in London at news@epvantage.com or follow @JacobPlieth or @EPVantage on Twitter

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