Novartis bucks trend as big pharma continues to trim staff

Analysis

As the world’s biggest drug makers continue to cut back in Western markets and push forward in new and emerging regions, the picture of this peer group as an employer is constantly shifting.

Last year, the restructuring and rationalisation programmes implemented across the industry showed no sign of abating, with all but two trimming positions, the analysis below shows. However, significant acquisitions by Abbott Laboratories and Novartis helped reverse a two-year decline in staff numbers at big pharma, the latter replacing Pfizer as the industry’s biggest employer (see table below).

Adding and subtracting

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

Eli Lilly, for example, reveals how many of its employees reside outside the US. So while in 2005 53% of its workforce was domestically based, by 2010 this had dropped to 46%, suggesting its axe has fallen mainly in the US. With huge patent expiries approaching, Lilly is drastically cutting back its US sales force, a picture largely mirrored by its peers.

Meanwhile, AstraZeneca, which reveals more geographical data, has been slimming down in the UK, continental Europe, and the Americas, whereas the number of employees in Asia, Africa and Australasia have climbed substantially in the last six years – from 9,200 in 2005 to reach 13,200 last year.

While many companies have announced huge redundancy programmes in the last few years, expansion in emerging markets at the same time has undoubtedly been adding new employees.

Beefing up

Bucking this trend is the industry’s now largest employer, Novartis, which has added staff all over the world over the last six years. Completing the acquisition of Alcon provided the big boost to its employee numbers last year.

The Swiss giant is expected to give an update on synergies and integration at its first-quarter results next week, which could well include plans to trim its now-huge workforce.

The other company responsible for this year’s uptick is Abbott, where growth in employee numbers is due mainly to two acquisitions: the $3.8bn purchase of Indian generics firm Piramal Healthcare and the drugs unit of European chemicals company Solvay for $6.56bn, the latter Abbott’s biggest buy for a decade (Abbott's buying spree continues with €4.5bn Solvay buy, September 28, 2009).

Noticeable trends

The addition of Genzyme’s 10,000 employees, shortly to be consolidated by Sanofi, to this tally for 2011 will help keep big pharma staff numbers buoyant this year.

On the flip side some serious restructuring is still going on, at Pfizer in particular, which remains a big employer despite the looming loss of Lipitor. With new chief executive Ian Read harbouring an explicit desire to trim the size of the company, Pfizer can be expected to fall down the employer ranking swiftly in the next few years (Has big thinking Pfizer come to a smaller conclusion?, March 15, 2011).

All stock market-listed companies announce their employee figures – the total pharma industry employee figure below is compiled from the 1,300 listed companies covered by EvaluatePharma.

Not all the annual reports for 2010 are available yet so the most recent figure cannot be calculated. However, the historical figures reveal a trend towards a diminishing importance of big pharma as an employer for the industry – the individual companies in the table below accounted for 44% of total industry employees in 2005, by 2009 this had slipped to 40%.

Clearly, big pharma still counts for a huge proportion of staff employed in the pharma industry. But the mega mergers and resulting rationalisations combined with a gradual exit from R&D are becoming more noticeable.

Big pharma employee numbers 
  2005 2006 2007 2008 2009 2010 09-10% 05-10%
Novartis 90,924 100,735 98,200 96,717 99,834 119,418 20% 31%
Johnson & Johnson 115,600 122,200 119,200 118,700 115,000 114,000 -1% -1%
Pfizer 106,000 98,000 86,600 81,800 116,500 110,600 -5% 4%
Sanofi-Aventis 97,181 100,289 99,495 98,213 104,867 101,575 -3% 5%
GlaxoSmithKline 100,728 102,695 103,000 99,000 99,913 96,461 -3% -4%
Merck & Co 61,500 60,000 59,800 55,200 100,000 94,000 -6% 53%
Abbott Laboratories 59,735 66,663 68,000 69,000 73,000 90,000 23% 51%
Roche * 68,128 74,372 78,604 80,080 81,507 80,653 -1% 18%
AstraZeneca 65,300 66,800 67,400 65,000 62,700 61,100 -3% -6%
Eli Lilly 42,600 41,500 40,600 40,450 40,360 38,350 -5% -10%
Bristol-Myers Squibb 43,000 43,000 42,000 35,000 28,000 27,000 -4% -37%
Wyeth 49,732 50,060 50,527 47,426 - - - -
Schering-Plough 32,600 33,500 55,000 51,000 - - - -
Total 933,028 959,814 968,426 937,586 921,681 933,157 1% 0%
Annual change   26,786 8,612 (30,840) (15,905) 11,476    
Total public industry 2,136,905 2,284,569 2,302,993 2,281,502 2,290,178 **    
* includes Genetech historically                
** total not yet available                

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