Global big pharmaceutical companies are accelerating overhauls by pushing large-scale restructuring and expanding artificial intelligence (AI) investment at the same time. With patents on drugs worth about $400 billion (about 597 trillion won) set to expire by 2036, they have begun in earnest to cut expense and streamline research and development (R&D).
According to the industry on the 19th, global big pharma companies are pursuing organizational slimming while shifting to AI-centered research and development systems to brace for potential profitability deterioration from patent expirations.
◇ Takeda, Novo, and Lilly all make deep cuts… pivot to AI
Japan's Takeda Pharmaceutical unveiled a "transformation program" at its annual earnings announcement on the 15th and said it would cut about 4,500 jobs by the 2026 fiscal year. That includes reducing 634 staff at its U.S. headquarters in Cambridge, Massachusetts. The company expects the restructuring to yield annual expense savings of more than 200 billion yen (1.26 trillion won) by 2028.
The reorganization is being pushed to coincide with the appointment next month of Julie Kim as Takeda's next chief executive officer (CEO). Along with job cuts, Takeda plans to realign its business structure, including launching three new drugs by next year.
This trend is spreading across global big pharma. An analysis by IQVIA and Fierce Pharma of 17 major drugmakers with annual sales of $20 billion or more found that these companies cut more than 22,000 jobs in the past year.
The industry views this as a structural strategy to prepare for large-scale patent expirations through the 2030s. As blockbuster drug patents end one after another and the risk of profitability deterioration grows, companies are restructuring to reduce labor and operating expense while increasing AI adoption.
In practice, major drugmakers are expanding AI investment alongside layoffs. Denmark's Novo Nordisk announced plans last September to cut about 9,000 jobs and set a target of saving about 8 billion Danish kroner a year (about 1.8538 trillion won). Merck in the United States is also pursuing annual expense savings of $3 billion (about 4.4325 trillion won) through restructuring involving several thousand jobs by 2027.
Switzerland's Roche has cut about 10,000 jobs worldwide through last year, and Novartis reduced 8,000 positions, about 10% of its workforce. France's Sanofi also eliminated more than 8,000 jobs as it reorganized equity in its consumer health business.
At the same time, these corporations are moving quickly to strengthen AI-based research and development capabilities. Merck partnered with Google Cloud to invest up to $1 billion to introduce "agentic AI," and Novo Nordisk signed a companywide AI adoption deal with OpenAI.
Roche is cited as the most aggressive investor. In Mar., Roche launched a "Hybrid Cloud AI factory," an AI supercomputing platform, with Nvidia. It added 2,176 of Nvidia's Blackwell GPUs, bringing its total to more than 3,500 GPUs in operation.
This is a massive computing infrastructure to analyze complex cellular structures and discover novel molecules that bind to specific targets, and it is considered the largest among hybrid AI infrastructures in the pharmaceutical industry disclosed to date.
U.S.-based Eli Lilly and Company also announced in Jan. plans with Nvidia to establish a $1 billion AI research lab. In Feb., it unveiled plans to build a supercomputer, "LillyPad," based on more than 1,000 GPUs.
◇ Concerns over layoffs grow in Korea too… AI research and development capabilities still in their infancy
In Korea's pharmaceutical and biotech sector, there are signs that moves to cut expense and streamline organizations are spreading. Some warn that if the government's ongoing drug price cut policy leads to weaker profitability, job insecurity could become a reality.
In fact, according to a survey conducted in Dec. by the Emergency Response Committee for Reforming the Drug Pricing System for the Development of the Pharmaceutical and Bio Industry, which targeted 59 pharmaceutical and biotech corporations, total employees at responding companies numbered 39,170. They said they plan to cut 1,691 jobs if the drug price reform plan is implemented as originally proposed. That is 9.1% of their existing workforce.
By contrast with global big pharma, some say capabilities for AI-based new drug development remain at an early stage. According to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA), Korea ranks fifth worldwide in AI infrastructure competitiveness, but only 13th in specialized talent competitiveness to apply it to actual drug development.
Industry voices also say Korea's pharmaceutical and biotech industry should not stop at simple expense cuts but accelerate a transition to AI-based research and development systems on a global level.
An industry official said, "The government emphasizes AI utilization, but in the bio sector, AI adoption often remains at the level of automating paperwork," and added, "Like global corporations, a shift is needed to apply AI and automation systems across research and development, including candidate discovery, clinical trials, and proof of concept (PoC)."