Pharma Layoffs Keep Coming, But Trail Last Year
11 CommentsBy Ed Silverman // August 31st, 2011 // 8:47 am
Yes, Merck is throwing thousands of employees overboard. Pfizer is ridding itself of sales reps in advance of the Lipitor patent expiration later this year, among numerous other cutbacks. And numerous other drugmakers have shed workers here and there. Nonetheless, the number of people laid off by pharma so far this year greatly trails the total at the same time a year ago.
The latest tally from Challenger, Gray & Christmas, the outplacement consultants that track monthly changes in each industry, finds that layoffs through August amounted to 18,386, which is a 50 percent drop from last year. Just 122 jobs were eliminated last month, while drugmakers disclosed plans to add another 433 positions (read the statement).
As a result, pharma has not spent the year near the top of the list of industries that are eliminating jobs, although more than 18,000 lost jobs is not small change, either. We should note, though, that this is not necessarily an all-inclusive picture. For one thing, selective hiring does continue for various positions at numerous companies. And not all job cuts are disclosed, since some companies eliminate staff in dribs and drabs and, therefore, are not required to file notices with their state governments.
Moreover, the firm apparently includes the recent disclosure by Merck to cut another 12,000 to 13,000 jobs, although some of these will be lost in other countries (see this). And so the implication is that job losses in the US may actually be fewer than the survey implies. As a result, the net effect may, unfortunately, be skewed. But with more patents expiring on big-selling drugs, well, you know…
axe pic thx to brittgow on flickr
original industry insider
Ed, consider this fact and you’ll realize that the magnitude of the pharma layoffs is much worse than the numbers would suggest. Most people laid off in the last 2-3 years have exhausted their severance benefits and COBRA, and are now rapidly depleting their life savings and nest eggs. Many of those in the 50+ age group have not found jobs and pretty soon they will be SOL, if they aren’t already.
Tom
So true. After 22 years in the industry and with a medical background combine with an MBA, tons of global experience and documented success, I have been unemployed for 2.5 years with only minimal consulting possible due to slashed budgets, no new products, and downsizing. It hasn’t been pretty. My COBRA benefits expire this month and at the age of 60, with an investment portfolio slashed by 70% in 2008, my future is precarious. Sure I could go back to medicine, but I never anticipated this and have been out of clinical practice so long that opportunities are very limited without retraining.
pharma gal
Pharma companies have become very savvy to the laws and prefer to have rolling layoffs that keep them under the WARN threshold. In doing so they don’t have to give employees the 60 days notice which is basically 2 months of paid salary when the worker is not really producing for the company that is paying him/her. Layoffs are no longer the sock price booster it used to be so pharmas are keeping it more under wraps.
company insider
Good point, Original insider. SOme people that use to do a great job are really in trouble.Some also were able to get rehired and then were let go again since they were the most recent hires. Not the job it use to be. ANd the outrageous micromanaging based on script tracking could drive anyone crazy. I actually think the script tracking had much to do with ruining the jobs. Just igve the new rep lots of money and soetimes they can influence business early. We use to spend years building our business, now one formulary change can ruin all that
ol cranky
Bear in mind, Pharma has been utilizing contractors through “functional service provider” relationships in clinical development and those folks aren’t included in the official layoff #s. Wyeth’s clinical development staffing was about 50% employee and 50% “contractor”
oh yeah and I think Pfizer’s layoffs in DevOps start 4Q11
Vet Rep
Morale is at an all time low among pharma’s sale reps AND management. Nobody really cares for the company anymore, and the rank & file know that the company cares very little for them. Hence, everyone is just doing the bare minimum to stay off one of the many “lists” big pharma generates to target employees. Combine all of this with poor pipelines and patent expirations and you have a very troubled industry.
original industry insider
Vet rep put it well. The stark reality these days is that all pharma FTE’s are nothing more than numbers on an Excel spreadsheet, and most have no illusions of anything different. Experience, awards, performance mean nothing.
Having consulted on some downsizing, the process that I’ve seen at work is that basically each department has its “target number” it has to meet for each round of cuts; that number is usually the product of a formula that factors in age, years of service and compensation in what seems like a series of endless and sad permutations. Whether you stay or go is pretty much a function of where your “number” falls on the spreadsheet in relation to the desired “number” for those to be retained.
After that it’s adios, surrender your parking pass, do not pass go and collect $200, and, for your lifers expecting that gold watch:
FUHGETABOUDIT
Big TRx producer
Hate to ever agree with oii, but his last post nails it. Legal runs big pharma now. They tell finance where they need to be with their FTE footprint. Finance tells HR and then HR tells the commercial teams.
When the Sales VPs retort that their 20 year vet at Hopkins has the ability to still get in with the department heads, attendings and fellows, HR doesn’t even blink: everyone in sales is fungible. The vet is cut along with their high salary, bonus, etc. Relationships vanish.
Fast forward a year. No one inside Hopkins has seen a rep from the company in a year. Sales are down. Legal sharpens the knives for another round to cut costs.
Pfizer has this model down to a science. GSK is skilled as well.
original industry insider
I know that agreeing with me is like drinking 200 proof grain alcohol straight out of the bottle, but on rare occasions I get it right.
What is also troublesome is the way layoffs are handled these days. I used to have an emotional hangover every time I had to lay off even a single employee. The process was always handled with compassion. We always kept an office open for an outplacement expert, and after being laid off the employee went straight to that office for counseling. The idea was to try and have the employee leave with some semblance of hope.
When I was a post-doc, I needed large quantities of fresh whole blood for some of my experiments, so I drove to the local slaughterhouse once/week to get my supply. As I was waiting outside, I watched as the cows were being herded into a pen, then marched single file into the slaughterhouse. Just before reaching the entrance they were shot between the eyes with a captive bolt pistol (see Anton Chigurh’s weapon in “No Country for Old Men”} in order to stun them. Once inside the building they were strung up by their back hooves and an attendant took a long knife to slice through the cow’s neck, severing all major blood vessels allowing the animal to exsanguinate.
As I think about the layoff process these days it reminds me of slaughterhouse experience all those years ago.
Got a New Job
All,
I was laid off from teh industry for a year, got back in, laid off again, and within 2 weeks was lucky enough to find another job in the industry. If i hadn;t been so lucky I would have left this industry. However, I will not be left in the same situation again. I like many of you went thru my entire 401 K before I got hired back on after 1 year in a layoff position. If I knew then what I know now I would not have done that. You see if you have a rollover IRA you can create a C-Corp legally and then use your 401K to reinvest in the company you create. You pay zero taxes to invest your 401K. It costs 5K to do this but you will pay much more in early withdrawal and penalties if you don’t. I would have saved 40K if I did this. This would allow many of you to start a new business and get out of this industry because the future does not look good. I hope this helps some of you. Look online for companies that can set this up for you. There is a good one in Houston. Just Google “using 401K to set up C-Corp” and you will find it.
original industry insider
Got, sounds good. I would add that if you over 59.5 year old you can withdraw from your 401K without an early withdrawal penalty.