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The 2 Main Market Trends that Are Driving Layoffs in the Pharmaceutical Industry

Sometimes, growing a business implies letting many of its employees go. The pharmaceutical industry is a perfect example.

Mergers and acquisitions

As in any other industry, mergers and acquisitions are a powerful driving force of temporary or permanent layoffs in the pharmaceutical industry.

When any two pharma or biotech companies merge, the departments can shrink to almost half the size. In addition, 50% of the professionals who were head of a department lose their position, as there is no need for two heads of marketing, finance or research and development, just to cite a few examples.

For better or for worse, layoffs are a natural consequence of the effort to maximize efficiency, reduce bureaucracy and eliminate unnecessary levels in the chain.

In fact, mergers and acquisitions are happening at an unprecedented pace in the pharma industry. So, thousands of jobs will continue being lost in the upcoming years.

In 2014, the giant Amgen registered around 4,000 layoffs. The subsidiary Onyx Pharmaceuticals was one of the most affected companies. And a facility in San Francisco was closed.

Although these layoffs deeply impact individuals and families, it gives the company groups an opportunity to better allocate human resources. When the trend was for each organization to work on its own, many departments were packed with an excessive number of employees.

Now, manufacturing, R&D and sales teams are the main targets of downsizing. Many times, though, it highly contributes to an increase in efficiency.

Shifts in the customer base

Pharmaceutical sales teams have been famously known as one of the biggest and most widespread marketing forces in the world. However, that reality is rapidly changing.

Sales forces have been heavily slashed over the last few years. Dozens of thousands of sales representatives have lost their jobs. There are several causes for this issue.

First off, nowadays patents for medications and pharmaceutical marketing procedures are much more scrutinized and regulated. Some companies have been in the midst of legal battles for unethically mass promoting drugs which overuse could even lead to death.

Also, the customers’ attitude and buying patterns have completely changed. Before, people relied solely on the opinions and the prescriptions of their doctor to buy medication. The aim of the sales forces was to persuade as many doctors as possible to recommend their company’s products.

Now, patients are much more informed and have much more control over what they buy. So today, the new big clients of the pharmaceutical companies are the health plans. They are much more complex and challenging than doctors. That’s why sales teams need to be reoriented.

That means drastically reducing the number of employees going from door to door, to clinics and hospitals. That approach is simply not viable anymore.

Do the huge layoffs mean that the pharma industry has stopped growing? It’s actually the contrary. To keep growing efficiently and sustainably, the industry needed to adapt to the new market trends.

It did so by alleviating corporate structures from the mass of human resources that block the efficient use of time and money.

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February 2023