PharmExec Blog

Pharma Leads the Pack in July Job Losses

Springtime optimism and the gentle steam of a perceived economic recovery in the US has all but dissipated, with the blanketing heat of deficit politics and a job situation that’s anything but august. In July, the US pharmaceutical industry shed 13,493 jobs, more than any other sector, according to an updated Challenger, Gray & Christmas report on employment trends by industry.

The report, released today, describes the surge in July job cuts as a “sudden and unexpected burst,” representing a 60% increase – and a 16-month high – in job losses. Merck’s announced layoffs, totaling 13,000, brought pharma past government as the leading sector for cuts in July, but government is the runaway leader in total job losses for 2010 (106,896) and 2011 (86,980), so far.

Merck’s ongoing job cuts are the result of a restructuring exercise that began after the company’s merger with Schering-Plough. Consolidation usually results in redundancy, but PhRMA, in a statement released in July, worried about cuts from a different hatchet. The Obama Administration, according to PhRMA, is not only overseeing massive job losses in government; it’s also setting up the pharmaceutical industry for a precipitous decline as the private sector employer of choice, with the highest average wages and benefits of any US industry.

“It’s extremely unfortunate that President Obama continues to push for a policy that could destabilize the successful Medicare Part D program and have a devastating effect on American jobs,” said PhRMA vice president Karl Uhlendorf, in a statement. Citing a recent JAMA study, John Castellani, PhRMA’s president and CEO, underscored the link between Part D “price controls” and American jobs. Government price controls could not only affect patients, “it could also be a devastating blow to our economy and further worsen the jobs crisis,” said Castellani.

PhRMA’s statements about the jobs impact of giving CMS the ability to negotiate drug prices, or demand drug rebates for Medicare/Medicaid duel eligibles, reflects the agenda of Chris Viehbacher, current chair of the PhRMA Board and CEO of Sanofi-Aventis, who wants to put more emphasis on industry’s economic contribution. PhRMA data indicates that for every one job created at a pharmaceutical company, another six jobs in adjacent businesses are created. With ongoing consolidations, new generic competition and a gap in pipeline productivity, however, industry’s argument around positive economic impact is likely to receive a skeptical reception, at least in the short term. Industry messaging should instead focus on the social benefits of innovation, its sole remaining virtue in the public realm. With pharma leading the pack in job cuts for July, and a mandate to curb government spending in congress, job creation isn’t likely to be a reputational selling point any time soon. Innovation, on the other hand, offers the promise of life-saving treatments that combat unmet medical needs, a positive message that regular citizens, also known as constituents, can get behind.

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One Comment

  1. Cammie Landholm
    Posted August 5, 2011 at 9:05 am | Permalink

    As person who was just recently laid off from Bayer Healthcare, I definitely am concerned about the future of this industry and worry about my friends who were lucky enough to retain their jobs. The question is how long will their luck last?

    The pharmaceutical industry put itself in this position several years ago when they went on a crazy hiring spree, and hired more people than they truly needed to education the physician on their products. As a result of this action, it made offices deny sales reps the access to prescribers. The industry also knew that at some point generics would dominate the industry, thus resulting in loss of jobs.

    I don’t feel bad for the industry itself, but I do feel bad for the all collateral damage their short sightedness and greed has caused thousands of people.

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