Few sectors are safe from the macroeconomic gales unleashed by the war in Ukraine, and the resilient pharmaceutical industry has not been left out. After the ‘boom’ of extraordinary due to the pandemic, the pharmaceutical industry adds a traumatic year of readjustment of the workforce to become more agile. Together with technology and consultancies, the drug manufacturing industry has arranged the year with announcements of workforce reductions, victims of mergers and eliminations of departments to centralize activity. International giants in the sector such as Johnson & Johnson and the Spanish Grifols, which has announced a reduction in staff of 2,300 people, have not been left out.
The blood products multinational announced just a couple of weeks ago the drastic reduction of its workforce, a plan that will affect one hundred employees in Spain. The Catalan company’s decision is part of an adjustment plan with which they expect to save 400 million euros by 2024 with measures to optimize costs and streamline functions.
In addition to promoting cheaper plasma collection, making it more efficient and modern, Grifols seeks to lighten its corporate structure, with centralization and automation of work flows and elimination of duplicate positions: make everything simpler, go ahead and reflect on the accounts of this year, but it must have a strong impact on those of 2024. The announcement was well received on the stock market, with a rise of 2.3% that same day. What has not been so well received is the resignation after four months in the position of Steven F. Mayer as executive president, which has resulted in unique falls in the park for the Ibex company, chosen by the Spanish selective that has announced a plan of mass layoffs.
At the international level, Johnson & Johnson has given the bell in the first bars of the year announcing another restructuring to save costs. The drugmaker is reviewing the operations of its infectious disease and vaccine groups and the widespread layoffs are expected to claim jobs around the world, an adjustment that falls under a “comprehensive review” of its portfolio, according to leaked company documents. to the media.
The American pharmaceutical company has halted its research into products related to Covid-19 due to the lack of demand and will join its division of infectious diseases and vaccines, a move that has already claimed James Merson, head of the infectious diseases unit, who has left the group. For now, the company is silent, although when rumors of a change of gear at the company surfaced last October, its chief financial officer, Joe Work, issued a warning that the company was trying to “size up its structure”.
Another of the giants in the sector that announced at the beginning of the year a slimming down of its structure is the German company. Most of the affected employees belong to the technology discovery and development area, although personnel from the research area have also been affected.
The company’s new Innovation and Development (R&D) strategy involves carrying out “external innovation” to reinforce its product portfolio, as stated in a statement issued last November, while giving clues to an adjustment of staff advancing “better in productivity” and a “more agile” organization. The company’s objective is to have a new product or specialty approximately every year and a half in the areas of oncology, neurology and immunology.
The layoffs have also reached the largest company in the sector by billing: Pfizer. The pharmaceutical company, which exceeded 100,000 million euros in turnover in the 2022 financial year, plans to cut the workforce of two of its research centers in the United States by paralyzing drug development programs “to rebalance its research portfolio.” Although it has not specified how many employees the measure will affect.
The wave of restructuring has reached the German giant Bayer. The company had large aircraft for one of its research plants in Berkeley, California, with an investment perspective of $1.2 billion over thirty years. However, the plant will lay off 55 of its employees in March. The pharmaceutical company pointed out in the statement that it was a “cost containment measure” while she reflected on “the changing needs of our portfolio.”
Also effect on biotechnologies
The torrent of layoffs isn’t just limited to industry giants. A string of biotechs have been announcing job cuts since last year. In fact, according to the specialized American media Fierce Biotech, the cuts reached 119 companies in the segment in 2022. Announcements of new personnel adjustments began to be part of the daily routine of the sector, so it will be decided to publish a “counter layoffs”, where the new workforce adjustments are added.
The sharpest spike in layoffs in the industry occurred last November, with up to 23 announcements from companies such as Biotechnologies, which will cut 60% of its workforce to save costs; Spectrum Pharmaceuticals, which after only one year of activity will reduce its R&D workforce by 75%, or Adaptimmune, which plans to cut 30% of its workforce during the first half of the year.
The wave of closures among start-ups in the sector comes after a curb in investor appetite. If in 2021 more than a hundred public offerings (IPOs) were made raising more than 15,000 million dollars, in 2022 fourteen operations were closed raising less than 2,000 million dollars, according to a PwC report. A shortage that the consultant points out will lead to an increase in mergers and acquisitions in the industry in the second half of the year.
Although to find the starting signal that opened the ban on cutting operating costs, you have to go back to January 2022, when Leo Pharma announced a major restructuring that initially affects 68 employees, but will eventually reach a thousand. The Danish drugmaker closed its regenerative medicine innovation center and its science and technology centers in Asia and Boston.
However, the big announcement of the year was from the Swiss pharmaceutical company Novartis, which already announced a “major restructuring” in April. The first to be affected were several high-level managers related to the R&D areas, but later the company did not specify to what extent it would affect the workers. The answer came in June, the company announcing that it would cut 8,000 jobs worldwide, resulting in savings of $1 billion. The layoffs are the result of the combination of various business units of the company that will unite the oncology and pharmacy units in a new area of innovative medicines.