Following the loss of patent exclusivity of its best-selling osteoporosis drug Actonel, the company’s President of European and Global Marketing, Hans van Zoonen, announced last week that a strategic review of European operations has resulted in a “restructuring initiative” that will allow Warner-Chilcott to pursue growth opportunities that align with its “key competitive strengths”.

The blunt reality of this in Europe is the axing of 500 jobs — a fifth of the company’s workforce — in Belgium the Netherlands, France, Germany, Italy, Spain, Switzerland and the UK. The only Western European areas to be spared are its facilities in Ireland and Weiterstadt, Germany, and its commercial operations in the UK.

But these European cutbacks signify part of a plan to shift the company’s focus further towards the US market. Already, of Warner-Chilcott’s current 2700 employees, the majority (1700) are the US. This balance will shift even more, of course, when the layoffs take effect, and the company is also placing more eggs in its US basket with the launch, later this year, of its new osteoporosis treatment, Atelvia, and its contraceptive, Loestrin.

As one industry blogger has noted, with the expected dash of cynicism, where else can the company focus on for new revenue but the US, “where we pay far more than the rest of the world for our drugs”? Whether or not this gamble pays off, Warner-Chilcott’s cuts in Europe should keep its US ambitions afloat for a while longer.

Once again, its the biggest Big Pharma of all that sets the pace. Pfizer’s latest financial report to shareholders provides a rich example of the high price of scaling down. To help digest the Wyeth acquisition alone, the company has swallowed more than $5.6 billion in employee termination charges over the past three years. Another $1.1 billion is due to be paid this year and next to account for layoffs associated with the closure of Pfizer’s Sandwich UK  research facility and the planned 25 reduction in overall spending on R&D.

All told, Pfizer’s “let’s get lean” diet has led to the departure of more than 36,000 employees since a formal program of rolling staff cuts called Adapting to Scale was launched in 2005 — with another 13,000 still to go in order to meet the Wyeth integration target of a 15 per cent reduction in the combined company workforce.  The total payout bill estimated by the forensic functionaries who fill all those holes in the Albert Hall? At least $9 billion, and with associated charges as much as $12 billion.

That’s no small change even for a company as large as Pfizer, which explains why the terms of separation have become progressively less generous as the number of affected employees increase.  But give some credit where its due: our own informal review of company exit packages reveals that Pfizer still sets the industry standard in terms of generosity.

The cries of anguish at Spanish drug-spending squeezes are coming not only from Madrid, but from many of the autonomous regions around the periphery of the country too.

After almost a decade of continual disruption and downward pressure on pricing, the medicines industry there was beginning to think that things couldn’t get any worse. That was before 2010 — which has neatly demonstrated that things could indeed get worse — much worse.

First, the reference pricing system first introduced in 2004 was tightened up, with the prices determined by the least expensive daily treatment cost, based on defined daily dose. Products with prices more than 30% above this level have to bring their prices down or lose reimbursement status. And all older products have to cut their prices by 30% even if there is no generic rival in Spain. Then in May price cuts of up to 30% were imposed on generics. In June, new rebates of 7.5% were imposed on medicines still under patent and not affected by the reference price system, with orphan medicines generously permitted a rebate of only 4%.

And as if these attacks from the country’s central administration were not enough, medicine manufacturers found themselves simultaneously assailed from the regions too. Back in 2002, Spain granted its autonomous regions a range of rights and responsibilities for health care. These did not include issues like marketing authorisations or decisions on pricing and reimbursement for medicines, which remained at national level. But the regions, as desperate for savings as central government, have now taken matters into their own hands and started trying to bring down demand and limit supply.

Some regions are setting up agencies to conduct their own assessment of therapeutic value, and creating their own regional prescribing guidelines. Others are establishing their own regional reference pricing systems. And some are vigorously encouraging – even requiring – generic prescribing. In Galicia, for instance, local officials estimate they will save 300,000 euros a day from the limited list they have instructed doctors in the region to abide by. The Spanish industry association, Farmaindustria, has already initiated legal action against these moves – as has the central government.

The seriousness of the problem can be easily gauged from the unlikely alliance formed last month by branded and generic manufacturers (along with wholesalers and pharmacies) to fight the spending squeezes coming from central government and from the regions. They said the cheaper prescribing campaign “impacts citizens” — which may be true. What is certain is that it also hits the players in the medicines market, with the cuts estimated to total 2.8 billion euros, or 14% of the sector’s turnover, and to threaten 25,000 jobs.

But like the rain, the pain could spread much further still. Regional drug lists are not new, but what makes them a more significant risk nowadays is the fashion for – indeed close to obsession with – health technology assessment. Serious questions have been raised about the quality of the evaluations by Spain’s regional authorities. There are also concerns over how appropriate the resulting guidelines are, and over the fitness of the mechanisms for imposing them.  Right now, the European debate on health technology assessment is starting to take off in a big way, and just at the time when the European Union is beginning a review of its rules on what member states can and cannot do in terms of drug pricing and reimbursement. If the trend towards local assessments of products’ merits gathers pace and goes unchecked, in Spain or elsewhere in the EU, it will destroy any hope of fixing the minimum standards for health technology assessment that the European industry has been seeking as a way of preventing abuse.

One can guess what Eliza Doolittle might have said to encourage the European drug industry to move a little faster in responding to the challenges it faces.

According to the newly released Job-Cut Announcement Report from outplacement consultancy firm Challenger, Gray & Christmas, pharma has cut more than 6,000 jobs in September alone, and more than 43,000 so far this year.

Which companies have contributed to this staggering number, and what are the underlying causes of job losses in the industry?

Most recently, Sanofi-Aventis announced its plans to eliminate 1,700 jobs in its US pharma business—about 25 percent of the company’s US pharma workers. The majority of jobs lost will be sales positions, and a small number of administrative jobs will disappear as well.

Before that, in September, Roche announced its “Operational Excellence Initiative,” which—while partly intended to analyze and restructure different segments of the company to maximize productivity and ROI—ultimately amounted to job cuts in an effort to “set the right priorities to ensure a successful future,” according to a statement released by Roche.

In May, Pfizer announced 6,000 layoffs that it said was part of “manufacturing reorganization” following its 2009 Wyeth acquisition. Possibly part of its plan to remain on track for its targeted cost reduction of $4 to $5 billion by the end of 2012, Pfizer has gone from nearly 114,000 employees internationally in Q 1 2010 to around 33,000 as of May of this year, according to a story on DailyFinance.com.

Following its 2009 acquisition of Schering-Plough, Merck began making cuts in February. The post-merger cuts would be a way to “eliminate some of the duplication,” according to a statement made in January by Merck CEO Dick Clark. “We have taken the best from both companies, from a process standpoint and a people standpoint,” he said.

And at the start of the year, way back in January, AstraZeneca announced its plan to cut around 8,000 jobs—four percent of its total workforce—over the next four years. As it does for so many Big Pharma players, the patent cliff lies at the heart of the issue. AstraZeneca products scheduled to lose patent protection this year are Armidex, a breast cancer therapy; and Pulmicort Respules, an asthma treatment.

Part of the trouble for drug manufacturers is the looming patent expiration dates and impending generics competition. Three of Sanofi’s top products—anticlotting medicines Lovenox and Plavix and cancer drug Taxotere—have or will soon have new generic competition, jeopardizing nearly $10 billion of the company’s $40 billion in annual sales, according to a story on Yahoo! Finance.

There are several other factors that are contributing to the layoffs trend:

• Structural transformations in the marketplace, focused on the declining relevance of a large sales force in an era of managed care as well as more targeted high-yield approaches to drug development that require less dedicated staff for R&D operations.

• Redeployment of assets in line with globalization and the ability to dig deep in untapped growth markets. Job losses in the US and Europe mean that more workers can be hired in countries like China—where, for example, turnover among sales forces is quite high and needs frequent replenishment.

• Advances in information technology that improve productivity for a smaller workforce. Information is not only a strategic asset; it is a labor-saving instrument to replace back-office functions and support more automation in manufacturing.

• The high cost of producing biologicals drugs are forcing companies to be more selective in where they manufacture, with fewer plants staffed by fewer people with more skills.

While such redistribution of assets and focus on greater ROI can be positive for a company as a whole, it can have negative effects on individual workers. In an industry that was once thought to be immune to layoffs, the dynamic can change if workers become wary of job loss, shifting toward a culture of bureaucratic self-preservation that may not always be in line with the importance of fostering entrepreurialism and prudent risk taking.

In 2006, the company announced plans to save $4 billion to $5 billion, and after its merger with Wyeth last year, Pfizer reported that almost 20,000 employees would feel the effects of those cost-cutting measures. The 6,000 layoffs announced yesterday are part of the previously announced 20,000.

The cuts are part of Pfizer’s “reconfiguring” of its global plant network. Eight plants in Ireland, Puerto Rico, and the US will be shut down over the next several years, with the process concluding in 2015. Six other plants will see reductions in work force. The hardest hit sites were solid-dose factories—three of the eight site “exits” are in Ireland.

Ireland will, in fact, be particularly hard hit. The financially beleaguered island posted a national unemployment rate of 11.4 percent in 2009, and has a debt 13 times larger than its GDP, according to CNBC. Irish newspaper The Independent reports that as many as 785 Pfizer employees could be given the boot, though the government and Pfizer hope the subsequent sale of the factories will preserve some jobs.

The six plant reductions are a little more geographically diverse, including one in the UK and another in Germany, and three are biotechnology manufacturers.

While the company didn’t offer specifics on its decision-making process for the cuts, Pfizer VP of external affairs Ray Kerins said they looked for sites where they could increase efficiency, reduce cost, and eliminate capacity for plants not operating at 100 percent.

“We’re ensuring that production is meeting market demands,” Kerins said.

A spokesperson told Pharm Exec that some reps will be moved to the company’s expanding vaccine sales group. Additionally, GSK will be designating its North Carolina location as its sole headquarters.

While some pharma companies are moving to a geographic sales structure, GSK chose to reorganize reps by therapeutic areas. “In the past, some of our teams were organized by where they reported to, whether it be Philadelphia or Research Triangle Park,” GSK spokesperson Mary Anne Rhyne told Pharm Exec. “Geography is still a concern in terms of making sure that reps are in the right places in the country, but we think this plan will allow us to provide healthcare professionals with more of the specialized information that they are looking for.”

For example, a rep could visit with a doctor and discuss all of GSK’s respiratory medicines instead of just Advair. This gives the company a corps of specialized sales reps who know a lot about a few drugs rather than a little bit about everything.

There are no plans to outsource positions to a contract organization as other pharma companies have recently done.

“This is about trimming the people that we have and making sure that they have the absolutely best training to offer this kind of information,” Rhyne said. “Our marketplace and portfolio are evolving. In the past year we had four different medicines that we lost to generics, but at the same time, we’ve added two new vaccines in the last quarter, and we’ve launched six different products in the last year. We need the kind of flexibility to be able to take those medicines to the sales staff so they can talk to the doctors about them.”

The restructuring is expected to be complete by the end of the year. GSK recently restructured its oncology division by merging the discovery and development divisions.

Correction and Update: GSK will not be eliminating its Philadelphia branch. The company has designated North Carolina as its headquarters but we will continue to have a significant presence in Philadelphia. No employees will be moved or released from the Philadelphia location.