Pfizer Cuts Jobs In Germany: Is It Payback?
15 CommentsBy Ed Silverman // September 15th, 2011 // 9:37 am
There is certainly nothing surprising that Pfizer or any other large drugmaker is planning to cut jobs. A few hundred here. A few thousand there. The drumbeat is been sounding for a few years now. And so a story that Pfizer is eliminating about 500 positions in Germany, at first blush, may not generate much if any interest beyond those to be effected.
However, recent changes in pricing regulations may have contributed as much to the decision as the all-too-familiar problem of expiring patents on big-selling meds. The German government recently adopted new regulations for controlling prices, which is significant since other countries use Germany as a reference point (back story). For instance, a price cap is expected to be placed on the Lyrica painkiller, which would reduce Pfizer profits.
“The healthcare policy environment has clearly clouded the expectations for future business,” said a Pfizer spokesman tells The Local, which also notes that tougher international standards for approving drugs, such as in the UK, are also playing a role in cost-cutting decisions.
Last week, Boehringer Ingelheim and Eli Lilly delayed the launch of their new Trajenta once-daily diabetes med in Germany as they wait for the outcome of pricing negotiations with the German government. Lilly ceo John Lechleiter recently criticized German healthcare reforms and complained that the Act for the Restructuring of the Pharmaceutical Market in Statutory Health Insurance prematurely attempts to determine the value of a drug before a sufficient track record is established.
axe pic thx to brittgow on flickr
original industry insider
Nice to see Pfizer is finally pushing back against the unionistas. Germany is about the hardest country to lay off people because of the strength of the labor unions. Therefore a 500 head count layoff in Germany is the equivalent of 5000 in the US.
Kudos to management.
keiner
@insider: You still live in the 1980’s, yeah? Ridiculous….
But here are two things mixed up, one is the dicount on drug prices (about 16% to 19%) and the other is the “additional benefit” assessment before prices for new (and in the future even for “old”, but still patent pending) drugs. As this “additional benefit” is currently nearly impossible to proof for a compound getting marketing authorisation (but is mandatory in Germany since 2011), Boehringer does not launch its new drug Germany.
Salient point
Businesses have the right to disband/contract/move if the regulatory environment is not favorable to their interests. The only alternative to this is a command economy.
This doesn’t mean governments shouldn’t enact whatever regulations & cost-cutting measures they like. But the potential for businesses to react–which is not revenge, by the way, but simply a response to a changed fiscal reality–needs to be factored in to every regulatory move a government makes. To behave otherwise is simply naive.
justwondering
Just wondering whether our government holds price negotiations prior to the release of a new drug (or at any time for that matter if it under patent protection)? Would you think? After all they claim they want to hold down the cost of health care. Why is the cost for the same drug in this country considerably higher than in other countries? Maybe the cost of drug development is much higher and risk for litigation, if it turns out a FDA approved drug has more risk than was originally foreseen is much higher. But if our government really wants to hold down health care costs, wouldn’t you think the government can act on these issues to make costs and risks lower for everyone? Just wondering
original industry insider
Justwondering, one of the great things about the US pharmaceutical industry, unlike Western Europe is that we don’t have to negotiate the launch price with FDA. In a market economy, unlike the Social Democrats in Europe, we are free to charge a price in order to pay for now what is close to one billions dollars in R&D costs and and be able to return dividends to the shareholders, who are the owners in a publically held company. Profit wise, the US pharma industry, contrary to popular opinion is not even near the top of the charts with respect to return on capital.
cliffintokyo
oii
Its time someone called you out for spreading disinformation via your comments.
US pharma industry DOES have to negotiate prices, with the health ins orgs, who can (but until now, only rarely) refuse to pay.
You are obviously a shill for wall street and stakeholders in pharma business, and have no concern for patients.
real pharma recruitment
US pharma industry DOES have to negotiate prices, with the health ins orgs, who can (but until now, only rarely) refuse to pay.
original industry insider
Yes, Cliff, while I’m shilling for big pharma, please note that I answered the specific question from justwondering, which was:
“Just wondering whether our government holds price negotiations prior to the release of a new drug (or at any time for that matter if it under patent protection)? Would you think?”
In your usual zest to impale me I hope that your drooling on your keyboard didn’t damage your machine. We would otherwise sorely miss your pearls of wisdom.
original industry insider
And yes, Cliff, I throw you a snausage. There is a difference between charging whatever we darn well please (that is until Obamacare takes away my future retirement house in New England)and the reimbursement we actually get. And with rebates, et al I have one fewer cars in my garage than I did 10 years ago. Thus I am forced to keep up my shilling so that I can hold on to my disproportionately large slice of the American Dream.
basement PharmD
for the record, Red Hat, Google, Microsoft, Exxon, GE, and MMM all have returns on sales, returns on equity, and returns of assets greater than the most profitable pharma or biotech.
Where is the horror?
Is it not my birthright to have free gas? State subsidized post it notes?
original industry insider
Thanks, BPharmD. I didn’t know the specific companies, but yes pharmaceutical companies rank nowhere near the top.
Your last comment reminded me of the ignorant voter who thought that Obama would get her free cable tv, and that Obamacare would mean no more medical bills starting the day the law was enacted.
Angry Pharm.D
“oii
Its time someone called you out for spreading disinformation via your comments.
US pharma industry DOES have to negotiate prices, with the health ins orgs, who can (but until now, only rarely) refuse to pay.
You are obviously a shill for wall street and stakeholders in pharma business, and have no concern for patients.”
I strongly agree
basement PharmD
who cares angry. you know we do very little without the industry to produce our “solutions.”
what industry would you rather have as most profitable? beer? video games? NFL? make-up? what would you have it be? or are you just mad that anyone make profits?
pull your head out of fantasy and know that pharma has and always will be a commercial venture.
original industry insider
Angry PharmD. if you have any type of 401K, IRA, or other type of retirement plan, it probably contains mutual funds that hold dividend paying stocks, or at least I hope you would. While my Big Pharma brethren rank only in the middle of the pack in profitability we continue to pay sweet dividends that go right into the portfolio of your retirement plan. So you better thank me and all other other corprate and wall street shills on whom you delight in abusing for helping set up that nice retirement home for you and the missus whereever you choose to end up.
cliffintokyo
Repy to all naysayers comments.
The difference is:
People buy beer, video games, cosmetics, even cars, because they WANT to;
People *buy* medicines because they HAVE to.
If you still say that pharmaceuticals should be considered exactly the same as consumer products, there is no hope for you.