PharmaView: Pharma Job Cuts: Decisive, Long-term Strategic Actions?

There’s no good way to deliver bad news, but that doesn’t mean it should be hidden or glossed over.

By Paul Thomas, Senior Editor

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In writing the feature article on our 2011 job and salary survey—see “On the Brink of Burnout”—I found myself in the same predicament I’ve been in the last few years: searching for a silver lining, trying to thread a bit of optimism into data that, frankly, is pretty depressing. We’ve surveyed hundreds of you each year for the past eight years now, asking about job security, career satisfaction, and what motivates you to keep plugging away. Each year the numbers trend a bit more towards the negative.

Among the unpleasant data, what I find most bothersome is this: 70 percent of you are concerned about job security. This compares with 44% during our first survey year, 2004, and 66% last year.

One of our trusted sources on job trends in the industry, RegentAtlantic’s Michael Steiner, reminds us that the layoffs have little to do with the economic recession in the U.S. and abroad. “Pharma was well into its slide when the financial crisis hit,” he says. The problems aren’t for a lack of investment or effort, he adds, but a lack of innovation and creativity in turning the industry’s fortunes around.

The January day I spoke with Steiner (plying him with questions about silver linings and hopeful signs), Abbott announced layoffs of 1,900 workers. CEO Miles White blamed, in part, “changes in the healthcare industry, including U.S. Health Care Reform and the challenging regulatory environment.”

As BNet’s Jim Edwards points out on his Placebo Effect blog, Abbott, in its 2010 quarterly reports, did list expenses related “specific health care reform impact on deferred tax assets,” and it claims it will experience millions more in costs related to healthcare reform in 2011. But these charges, Edwards notes, pale in comparison to the $1 billion Abbott recorded for the acquisitions of Solvay and Piramal. (And there’s the fact that, prior to the Obama legislation’s passing, Abbott let go more than 3,000 workers, mainly at Solvay’s Marietta, Georgia headquarters.) Upon further inspection, I also see that Abbott’s 2010 balance sheet also took a major hit from the company’s Similac recalls of September.

Yet the press release from Abbott in my inbox that morning was rosy, aimed at investors. White summed things up in this way: “Despite a very challenging environment, 2010 was another productive year for Abbott, resulting in strong financial performance . . . We also took decisive long-term strategic actions to expand our emerging markets presence and late-stage pipeline to better position Abbott for sustainable long-term growth. We anticipate delivering another year of double-digit ongoing earnings-per-share growth in 2011.”

It’s not just that jobs are going, but the way it’s happening—the way the news is withheld, delicately doled out, and spun. It does no one a service in Marietta or elsewhere to blame the economy, the president, the regulatory environment, or countless other external factors. It hurts to hear that decisions to cut jobs are made in the name of “decisive long-term strategic actions.”

It’s also grating when these same companies offer gratuitous praise of themselves and workers during hard times. Another recent press release out of Abbott Park heralded the fact that the company was recognized by The Chronicle of Philanthropy as among the “most generous” companies in the U.S. It ranked 5 out of 162 U.S. companies, on the strength of a whopping 83 percent of Abbott employees who participated in the company’s employee giving programs.

Despite this giving, many Abbott workers are receiving . . . pink slips. The real problem—jobs are moving offshore. Should the economy rebound this year, it doesn’t mean that pharma jobs will. To quote Bruce Springsteen, “these jobs are going, boys, and they ain’t comin’ back.” We’ve come to accept this fact.

New jobs will be created, of course, with biopharma taking the lead. And as Steiner notes in the cover story, QA/QC jobs may see a bounce due to the spate of drug recalls we’ve seen at Abbott and other manufacturers, and the need for wholesale improvements in quality control—an ironic, though hollow, victory for pharmaceutical industry workers in the U.S.

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