Pink Slips and Body Counts

Ever since Jeffrey Kindler rocked our world last December with the news that Pfizer was cutting its sales force by 10,000, we've been waiting for all the other behemoths' shoes to drop. While no precise domino effect has occurred, downsizing, particularly on the sales side, is very much pharma's strategy du jour.

Cuts by Company

As second-quarter numbers were filed in the last week of July, David Brennan sweetened AstraZeneca's bitter bottom line by announcing that he was upping the number of job cuts to 7,600, or 11 percent of its staff. A few day's later, Johnson & Johnson's Bill Weldon joined in, saying that the healthcare giant was "consolidating certain operations" and "standardizing and streamlining"—i.e., giving the boot to 4,820, or up to 4 percent, of its workers. That would include the 600 jobs at Bay Area-based biotech Alza, which J&J bought for a cool $12 billion only six years ago. Speaking of biotechs, the Grim Reaper has been swinging his blade up and down that industry too. After drug-development disasters, Ligand is lopping off 76 percent of its staff; Encysive is eliminating 70 percent; and Intermune, Atherogenics, and Renovis are slimming down by almost half. Meantime, Merck is continuing with its 7,000-by-'09 campaign, "restructuring" to the tune of an 11 percent overall layoff.

The Ups and Downs of Downsizing, 2001–2007

By June, Big Pharma had already lost as many employees as in all of 2006. In fact, since 9/11, the drug industry has been losing jobs more (28,519 in 2003) or less (11,488 in 2002) consistently.

Says John Challenger, CEO of outplacing consulting agency Challenger, Gray and Christmas: "The fact that healthcare is one of the strongest sectors in our strong economy puts the industry's ongoing downsizing in even sharper perspective. It's no secret that Big Pharma is experiencing turbulence." But some of that turbulence is a result of the industry's own serious efforts to innovate business around a less corporate, more entrepreneurial model. "Everyone has been talking for so long about Big Pharma being so bloated," says Challenger, "but when you consider that it has dropped more than 100,000 jobs over the past six or seven years, the question becomes, At what point do you stop cutting off the fat and start cutting into muscle?"

No one said paradigm shifts were painless. Just ask any Pharmer who was restructured or outsourced right out of a job. And not all are perky young sales reps: Abbott cut 200 scientists along with an equal number of reps in its most recent layoffs. At press time, Amgen announced the first-ever layoffs in its 27-year history—a 12 to 14 percent cut. Pharm Exec readers know Amgen as the world's biggest biotech, but around Los Angeles, it is thought of as Thousand Oak's biggest employer—its 8,300 Amgenites have kept the local economy singing for two-plus decades. When CEO Kevin Sharer left a company-wide voicemail last week warning of "upcoming changes," word spread like wildfire. Now the entire town is worried that the song is over.