Big Pharma job cuts and drug prices

AstraZeneca just announced a second round of job cuts amounting to 12 per cent of its workforce by 2014.  That’s about 10,000 people according to the Wall Street Journal. AZ is by no means the only one. According to the biomedicalsciencesblog ,  over 50,000 job cuts were announced or implemented by companies such as Pfizer, Johnson & Johnson, GSK and Merck in 2009. This was across functions and in the case of J&J across businesses.

In the meantime, Big Pharma is adding jobs in emerging markets such as India, opening research centres, and reinvesting in manufacturing which it had walked out of in the nineties and early 2000s (hacking jobs in the process). 

The irony of it is that most of the jobs are being lost now where Big Pharma has traditionally made its fattest profits. Or in other words, countries with very high drug prices, a result not just of higher levels of prosperity but favourable patent regimes and where healthcare is paid for by insurers or governments.  On the other hand, the jobs are coming to countries where prices are far lower (and so is welfare and insurance penetration).

At some point someone is going to get up and say: ‘Wait a minute. So you’re going to take away our jobs (which in the US also means related perks like health insurance I assume) and you’re going to make these people a bigger burden on our social security system. In the meantime, you’re going to keep charging us high prices while in countries such as India you’re charging in some cases a fifth of what you’re charging us because they can’t afford to pay. And you’re giving them our jobs so you’re taking away our ability to pay too.’

Sitting in India,  ‘a growing economy’, these problems ought not to bother much.  But am not hearing any hosannas to the drug industry here either.  They are accused of charging high prices in a relatively poor country, and more recently of attempting to keep legitimate cut-price generics off the market by abusing India’s newly-created patent system. And the number of jobs that the drug industry is creating here pale in comparison to some other sectors like information technology, business process outsourcing,  or infrastructure.   So that’s not creating the kind of mass goodwill that one might expect.

Sounds like a problem to me.


One thought on “Big Pharma job cuts and drug prices

  1. I contradict you on the point that jobs are being added in India.. As my wife is a Phd in Pharmacology I have some idea of the job market in the Pharma industry.. Her colleagues were grumbling that there is hardly any new recruitment taking place and those who are working are compelled to leave by making them slog like donkeys 14-16 hrs a day.. Pharmacologists and Researchers have only academics as a good career option with colleges blossoming in every corner of the country.. But God only knows what these fresh graduates are going to do after they pass out…


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