This year, restructuring at global big pharmaceutical corporations (big pharma) is continuing. Analysts say corporations that need to find new growth engines to overcome intensifying competition and slowing growth are first cutting headcount to reduce expense.
Danish drugmaker Novo Nordisk said on the 10th (local time) that it will lay off 9,000 of its 78,400 employees deployed worldwide. The company expected the restructuring to generate annual expense savings of about 8 billion Danish kroner by the end of next year.
Novo Nordisk is a company that achieved major growth with its diabetes and obesity drugs Ozempic and Wegovy. But it has grown anxious as it failed to maintain market share amid the chase from U.S. pharmaceutical corporations Eli Lilly, which competes in the diabetes and obesity market.
The restructuring is the first reform measure taken after CEO Majiaar Mike Doustar, appointed to succeed former CEO Lars Fruergaard Jorgensen, took office.
This is not just about this company. U.S. company Merck (MSD) said in late Jul. it would cut about 6,000 jobs from its global workforce.
MSD said it would save $3 billion a year by the end of 2027 (about 4.1 trillion won) and, as part of that, would eliminate some administrative, sales, and research and development (R&D) positions through a new restructuring program. MSD also said, "We will also proceed with reducing global real estate asset," and "We will provide training opportunities to help affected employees transition to new roles."
U.S. company Moderna also plans to cut about 10% of its global workforce by the end of this year. Genentech, a subsidiary of France's Roche, said it would lay off employees across its U.S. hubs this year.
At the end of last year, U.S. pharmaceutical corporations Johnson & Johnson (J&J), Bristol-Myers Squibb (BMS), and Pfizer also announced successive staff reduction plans.
The corporations undergoing restructuring are those facing heightened concerns about slowing earnings growth.
In the cases of MSD, BMS, and J&J, they pursued restructuring ahead of patent expirations for blockbuster original drugs that have driven their results. The move reflects a judgment that it will be hard to avoid declines in market share and revenue due to competition from generics. MSD's cancer drug Keytruda and BMS's anticoagulant Eliquis are set to lose their U.S. patents in 2028. J&J's autoimmune disease therapy Stelara lost its patents in Europe and the United States last year.
For Moderna and Pfizer, earnings and share prices surged during the COVID-19 pandemic on the back of COVID-19 vaccines and treatments, but as the phase shifted, sales slumped and their share prices and results plunged.
As global pharmaceutical corporations restructure, Korean subsidiaries are also growing more tense. The ripple effects could reach the Korean entities. In fact, in step with J&J's restructuring announcement last year, it led to restructuring at Janssen Korea's domestic prescription drug division in Dec. last year. At the time, voluntary retirement was carried out for certain job categories and levels.
An industry official said, "Global big pharma is commonly downsizing low-growth institutional sector to concentrate resources on core growth areas, and is adjusting headcount to streamline," adding, "The ripple effects could extend to Korean branches."