Pharma Job Cuts Cause Anxiety for European Governments

With downsizing occurring more frequently than ever within the pharmaceutical industry, is Europe doing enough to curb further job losses that could threaten the recovery of its economy?
Jun 02, 2013

With downsizing occurring more frequently than ever within the pharmaceutical industry, is Europe doing enough to curb further job losses that could threaten the recovery of its economy?

As a major source of employment, the pharmaceutical industry plays a key role in the European economy. According to the European Federation of Pharmaceutical Industries and Associations (EFPIA), the industry at present directly employs 660 000 people in the region (1). Equally important is the fact that it generates between three to four times of additional employment indirectly (1). Therefore, while many European governments have focused on cost-containment measures as a means to curb healthcare spending, they remain wary of putting too much pressure on pharmaceutical companies because of the impact it could potentially have on their investment in the region (2).

Companies have been voicing their concerns for a number of years about the tough operating conditions in Europe, hinting that they may shift investment to other regions, particularly the emerging markets. Over the past two years, there have been a series of high-profile job cuts in the European pharmaceutical sector, with companies linking such measures to the unfavourable operating environment. For politicians, these measures could not have happened at a worse time. With Europe in the midst of economic crisis and governments struggling to create new jobs, the role of the pharmaceutical industry as a major employer is crucial to economic recovery.

The significant impact of a pharmaceutical company’s decision to cut jobs is illustrated by Pfizer’s closure of its R&D base at Sandwich, Kent in 2011 (3). Given the site’s previous successes on the R&D front, for example having discovered products such as Viagra, Pfizer’s decision came as a shock to observers because the UK is known to have a long-standing history of a vibrant pharmaceutical sector. Unions complained about the government’s economic cutbacks and highlighted that the jobs lost at Pfizer’s facility were the type that the country needed to preserve for economic recovery and that the move would devastate the local region (4). Although a total of 2400 direct job losses were reported, it was estimated that because other sectors depended on Pfizer’s business, the region would lose approximately 5000 jobs overall (3).

Following Pfizer’s announcement, the government and local authorities have been striving to come up with an alternative plan that can sustain the region, but has so far failed to produce anything conclusive. Perhaps even more worrying for the UK government is that with Pfizer taking such a major decision to cut jobs, other companies may be less apprehensive about taking a similar approach. While companies may not openly state that cost containment plays a part in such decisions, it is likely to be the case.

The latest shock concerning job cuts was announced by AstraZeneca this year (5, 6). In March, AstraZeneca stated that it would be closing down its Alderley Park R&DD facility. Like Pfizer’s Sandwich site, this facility had been considered a major base for R&D in the UK and would therefore have a dramatic local effect. At least 700 jobs were set to go as a result of the Alderley Park closure and 1600 staff would be asked to relocate to Cambridge (5, 6). The announcement was particularly embarrassing for the government given that the local area is in the constituency of George Osborne, Chancellor of the Exchequer. Five months earlier, Osborne had helped AstraZeneca to secure a £5-million government grant to develop its Alderley Park R&D facility (7).

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