“Downsizing Storm” of Multinational Pharmaceutical Enterprises Hits in 2018

According to reports of overseas media like Reuters on Dec. 11, 2018, Boehringer Ingelheim has confirmed that they plan to reduce about 10% labor force in France, involving 327 employees. And there has already been news of layoffs involving Sanofi, Bayer, Novartis, Novo Nordisk, and GSK. As the "downsizing storm" of multinational pharmaceutical enterprises hits in 2018, is it indicating that the cold wave of the global pharmaceutical industry is coming?

I. 6 multinational pharmaceutical enterprises involved in the "downsizing storm" of 2018

NO.01. Bayer plans to reduce 12,000 jobs

Layoff situation:

Bayer announced on Nov. 30, 2018 that it planned to quit its Animal Health business, sell part of its consumer health brands and product lines, and reduce 12,000 jobs in total. Bayer will focus on promoting the earnings growth of its core health consumption variety through those changes.

NO.02. Novartis plans to reduce over 2,200 jobs

Layoff situation:

Novartis announced on Sep. 25, 2018 that it planned to cut over 2,200 jobs in its headquarters in Switzerland, which would involve 1,500 front-line employees for pharmaceutical production and about 700 employees of its commercial service department. It is reported that the layoff of Novartis also aims to focus on its key strategy; Novartis would create 450 new job opportunities to cooperate with the preparations of its cell and gene therapy production base. Furthermore, Novartis promises that it will make sure of spending CHF3 billion special fund every year on the R&D and production of new pharmaceutical products and new therapies.

NO.03. Sanofi plans to reduce 670 jobs

Layoff situation:

On Dec. 6, 2018, the French drug manufacturer Sanofi told the labor union on Wednesday that it was planning to cut 670 jobs in France, and the layoff plan was to be completed by the end of 2020. Sanofi’s such plan will be set on a voluntary basis, and will affect outreach affairs, human resources, finance, accounting, legal, and technical support departments, etc. In addition, 80 IT jobs are to be outsourced. Sanofi said the purpose of the layoff was to focus on the R&D, and it would invest EUR700 million (about RMB5.46 billion in total) to upgrade its production facilities, mainly in biotechnology and vaccine industries. Apparently, the layoff of Sanofi also aims to balance and restructure its business and focus on its core areas.

NO.04. GSK plans to cut 650 jobs

Layoff situation:

GSK announced on Sep. 17, 2018 that it would cut 650 jobs in the U.S., including 200 back office jobs and 450 medical sales representative jobs. According to report, GSK has reported the layoff program to the U.S. Department of Commerce and each state. The balance of funds from the layoff will be put into the new product R&D and commercial support, which is purportedly a part of the global restructuring plan of GSK.

NO.05. Novo Nordisk plans to cut 400 jobs

Layoff situation:

Novo Nordisk released its Plans to Transform Approach to Research & Development on its website on Sep. 18, 2018, announcing that it will lay off 400 employees in China and Denmark, including administrative staff, lab technicians, and scientists, to enable increased investment in transformational biological and technological innovation within both core and new therapy areas.

NO.06. Boehringer Ingelheim plans to cut 327 jobs

Layoff situation:

According to reports of overseas media like Reuters on Dec. 11, 2018, Boehringer Ingelheim plans to reduce about 10% labor force in France, involving 327 employees, including 130 in its animal health unit and 197 in human health unit.

II. Facing the cold wave, how will Chinese pharmaceutical industry develop in the future?

In fact, there is no sign that the downsizing storm whipped up by multinational pharmaceutical giants will stop in recent years in addition to 2018. International pharmaceutical enterprises have whipped up the downsizing storm since 2011 as the R&D efficiency becomes low, patent cliff arrives, and pharmaceutical enterprises conduct merger and acquisition frequently. In 2018 as new important policies in areas of Chinese pharmaceutical industry gradually come into effect, it will bring more "incremental instead of radical" changes. For example, under the background of the combination of consistency evaluation and procurement with target quantity, the market dividend period of multinational pharmaceutical enterprises will gradually end, and original drugs produced by multinational pharmaceutical giants should be subject to large price reduction or they will lose a large global market.

The downsizing storm of pharmaceutical giants may continue in the upcoming 2019. Most multinational pharmaceutical giants may adjust product lines, make layoff plan, restructure R&D department, or upgrade R&D facilities, so as to cut costs and input the saved funds into R&D to launch more products to the market. However, we don’t have to be discontent or pessimistic about the pharmaceutical industry, as it is always a genuine sunrise industry, in particular, bio-medicine industry is the most innovative and promising strategic emerging industry in China; the growth of the Chinese pharmaceutical market will still be well ahead, and widespread large-scale layoffs will not happen.

References

https://baike.baidu.com

http://blog.sina.com.cn/s/blog_66c3dc270102yhtl.html

http://blog.sina.com.cn/s/blog_66c3dc270102yhtl.html

*About the author:

Dishui Sinan, male, senior biomedical engineer, basing on the quality management work in bio-medicine industry, focusing on the bio-medicine industry, and wishing to talk in simple language about the specialized knowledge that is not simple and provide a knowledge compass to guide readers in the sea of knowledge.

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