Thursday, 22 May 2014

Pharma’s important role as an employer

As well as being a major producer of medicines, the pharmaceutical industry is a vitally important contributor to the economy, particularly as an employer. For example, in the US, the sector employs more than 810,000 workers and indirectly supports a total of 3.4 million jobs across the country. In the UK, the industry employs around 68,000 people of which 23,000 work in R&D. According to the European Federation of Pharmaceutical Industries and Associations, the industry directly currently employs 660,000 people in Europe and generates between 3 to 4 times additional employment indirectly. Therefore, while many European governments have focused on cost containment measures as a means to curb healthcare spending they remain nervous about putting too much pressure on pharmaceutical companies because of the impact it might have on their investment in the region.

Companies have been grumbling for a number of years about the tough operating conditions in Europe and hinting that they may shift investment to other regions, particularly emerging markets. Over the past few 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 be taking place 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 critical to economic recovery.

The wide-ranging impact of a pharmaceutical company’s decision to cut jobs is illustrated by Pfizer’s 2011 closure of its R&D base at Sandwich, Kent. Unions complained about the government’s economic cutbacks and highlighted that the jobs being lost at Pfizer’s facility were the type that the UK needed to preserve for economic recovery and that the move would devastate the local region.

The UK is not the only country where national politicians have found themselves under pressure as a result of pharmaceutical industry job cuts. France has been experiencing a similar situation due to Sanofi reorganising its global operations. In July 2012, the national newspaper Le Figaro reported in July 2012 that up to 2000 jobs might go as part of a Sanofi drive to reduce the workforce. The French government was forced to reacted quickly, as it was already facing considerable public criticism for being unable to kickstart the economy and due to imminent job cuts in the automotive sector. It held behind the scenes discussions with Sanofi which led to the company announcing that it would cut fewer jobs and a commitment to maintaining its existing sites in France.

European governments need to be mindful regarding potential job cuts within the pharmaceutical sector and engage with companies to safeguard employment. In late 2012, GlaxoSmithKline’s CEO painted a depressing picture regarding company’s view of the European market, with analysts linking such statements to future job losses.

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