All over the world, there have been cuts in research and development within the pharmaceutical industry, as the economic crisis deepens.
The future of the sector also looks in jeopardy as manufacturing cuts and staff lay-offs continue to hinder production, and release of life-saving drugs and medicines.
Take the drug giant AstraZeneca for example. The number of employees that have been laid off from one of the pharmaceutical industries’ biggest players is quite astounding – some 12,600 between 2007-2009.
2010 and 2011 saw a further 9,000 employees leaving their posts, and recent reports suggest that another 7,300 will be axed this year.
Thousands of companies had to stem their financial losses as a result of the economic crisis, and job cuts have been one of the main conclusions, however 29,900 losses in over 6 years is quite unbelievable and suggests that the pharmaceutical industry may be in a spot of bother.
Throughout their period of financial instability, AstraZeneca has continued to provide work in Asia over many sections of the business, however their overall workforce remains extremely limited.
Sink or Swim?
In a climate of financial turmoil, it’s the shareholders that have to be kept happy as they ultimately run the company.
However with the wave of continued cost-cutting and money recycling throughout the pharmaceutical industry, keeping the investors afloat may result in the rest of the ship sinking. Even pharmaceutical development services have taken a hit, and without research teams, the development of new drugs will fall short of demand.
More Job Cuts
AstraZeneca is planning a fast $4.5bn cost-cutting measure for late 2012. Although described as ‘share buy-backs’, the company hasn’t refuted the possibility of more job cuts. Over the past year, sales have taken a drop of 2 per cent, with worldwide operating profits falling 4 per cent to $13.2bn.
Worryingly, that’s not the worst of it. Other pharmaceutical giants, selling unlicensed medicines have started competing for the rights to the anti-cholesterol drug, Crestor, leaving AstraZeneca slow off the mark.
As with most of their heavy-hitting rivals, AstraZeneca faces the time-old conundrum of whether or not to pump fast sums of money into developing breakthrough drugs, or steadily invest in their current programs and wait for a drug to hit the big screens.
To ensure their long-term prosperity, drug firms need to invest in breakthrough drugs. Breakthrough medicine provides a heavy cash windfall as health systems all over the world, like the UK’s NHS, battle to stock the latest life-saving drugs.
However the discovery of these breakthrough drugs that can cure many conditions for millions of people is becoming less and less certain. Over the last ten years, financial returns on breakthrough drugs have slipped significantly.
It has taken decades, but the answer still eludes the pharmaceutical industry – what is the best way to allocate the cash? Do they protect their investments with share buy-backs in the short term, or do companies invest in research and hope that it pays off with a miracle cure? One thing is for sure, and that’s that every pharmaceutical company is in the same position, and is in danger of falling short of the financial finish line.
This post was written on behalf of NU Pharm the pharmaceutical development services company