Reportlinker Adds Strategies for Managing Pharmaceutical Workforce and Site Reductions: Analysis of legal, productivity, and quality control issues

Wednesday, August 25, 2010 Drug News
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NEW YORK, Aug. 25 announces that a new market research report is available in its catalogue:

Strategies for Managing Pharmaceutical Workforce and Site Reductions: Analysis of legal, productivity, and quality control issues

In 2007, due to the impending patent cliff and the consequent need to cut costs, big pharma began for the first time to outsource chemical API manufacturing to China and India. Prior to this only generic drug companies had manufactured in the two countries. Since then, big pharma has been undergoing waves of layoffs that have been accelerated by the economic downturn, with manufacturing and sales being particularly affected, and outsourcing levels in R&D and manufacturing are expected to increase further in the future.

This report examines the different strategies available for managing the layoffs and site closures resulting from not only the outsourcing of R&D and manufacturing, but also the transition from small-molecules to biologics and the need to exploit new markets. The factors causing change and producing the need for workforce reductions are analysed, and the expected impact across the pharmaceutical workforce in the US is detailed. The consequences of layoffs and site closures in terms of legal compliance, maintenance of productivity, and safeguarding of quality control are discussed in depth. Case studies from the pharmaceutical industry are provided to highlight pitfalls and illustrate best practice. The report concludes with discussion of the long-term risks associated with over-dependence on expansion in nonmarket economies and suggests methods to lower these risks.

Key features of this report

-- A single reference for comparing details on employment protection regulations in different countries, and for the US highlights of major differences in specific states with large pharma employment

-- Comprehensive coverage of the changes occurring in pharmaceutical industry employment in developed nations.

-- Demonstration of how to achieve a cost-effective workforce reduction while maintaining R&D innovation and manufacturing quality.

-- Case studies of issues resulting from workforce reductions and outsourcing of manufacturing and R&D, with numerous examples of pitfalls and best practice.

Scope of this report

-- Identify current and future trends in pharmaceutical industry employment and understand their causes.

-- Assess inter-country (and within the US inter-state) differences in employment protection regulations.

-- Gain insight into strategies that have been used for facility divestitures to achieve optimum returns.

-- Appreciate the benefits of engaging with key local stakeholders during workforce reductions and site closures, and understand the sanctions which local governments may attempt to impose.

-- Understand the important role of employee morale and identify measures to retain key staff.

Key Market Issues

-- From 1996-2005, US pharma's sales force nearly doubled to 100,000 to support a 26% increase in practicing physicians. However, a significant number of drugs will lose patent protection over the next four years, 2010-2014, representing roughly $60bn in total, and the generic share of the drug market has increased from 49% to 74% of total sales in the US from 2000-2009.

-- Different companies are adopting various approaches for R&D outsourcing; for example, Eli Lilly plans to outsource 50%, whereas Novartis is committed to a large internal R&D team.

-- In 2007, global big pharma including AZ, Pfizer, GSK, and BMS, first announced its plans to outsource API manufacturing to China and India; in the same year, of the 1,154 generic drug applications to the US FDA, only 13% of the manufacturing plants were in the US, while 43% and 39% of the plants were abroad in China and India respectively.

-- Discovery R&D scientific jobs in the pharmaceutical industry require significant years of education and on the job training; in particular, the shift of chemistry jobs overseas will have long-term negative effects on the US pool of chemistry talent that will be difficult to reverse.

-- Regional stakeholders, including local business and government leaders, are keenly interested in identifying solutions for the future of manufacturing sites and supplying assistance for the displaced employees.

Key findings from this report

-- The projected growth from 2008-2018 for US pharmaceutical and medicine manufacturing employment lags behind the projected employment growth for all US industries, at 6% versus 11% respectively, due to generic competition and drug production moving overseas.

-- OECD synthetic indicators measure the strictness of overall employment protection against dismissals of part- and full-time employees and restrictions on temporary hires, and are low for the US, Canada, and the UK; intermediate for Ireland, Japan, and Hungary; and high for Germany, China, India, and France.

-- Companies that work closely with regional stakeholders will gain partners who assist with marketing and locating financial investment and potential buyers for the closed facility.

-- The timing of workforce reduction announcements can be crucial to the reception both within the workforce and in the wider community. In some cases, poorly chosen timing has significantly complicated the layoff process and has generated considerable bad press.

Key questions answered

-- What are the employment protection regulations regarding a mass layoff or facility closure in key states in the US and countries in Europe and Asia?

-- What happens to the government tax benefits and incentives when a company undergoes employment reduction?

-- When and why do companies provide additional severance and displacement support?

-- What two factors are key for a cost-efficient workforce reduction?

-- How does a company most effectively and quickly recover from a workforce reduction?

-- What is necessary to maintain an innovative R&D group after a workforce reduction?

-- What are the long-term risks of outsourcing to China and India? How does a company minimize risk exposure to nonmarket economies?

Table of Contents

Strategies for Managing Pharmaceutical Workforce and

Site Reductions

Executive summary 12

Introduction 12

Pharmaceutical employment trends in developed nations 13

Legal regulations and considerations 13

Managing employees through workforce reductions 14

Biotech and pharma workforce reductions 15

R&D and manufacturing site closures 15

Outsourcing and offshoring for research and manufacturing 16

Long-term risks of outsourcing and offshoring 17

Chapter 1 Introduction 20

Summary 20

Introduction 21

Pharmaceutical industry background 21

Pharma background 22

Main pharma therapeutics 23

Biotech background 24

Main biotech therapeutics 25

Current snapshot of the pharmaceutical industry 26

Current sales, manufacturing, and R&D 26

Current challenges facing the pharmaceutical industry 27

Big pharma challenges 29

Biotech challenges 31

Current changes for the pharmaceutical industry 33

Mergers and acquisitions 33

Workforce reductions 35

Outsourcing of R&D 35

Manufacturing moving to China and India 36

Effects of change on the pharmaceutical industry 36

Convergence of big pharma and biotech 37

Effects of change on big pharma 38

Effect on big pharma sales 39

Effect on big pharma manufacturing 39

Effect on big pharma R&D 39

Effects of change on biotech 41

Effect on biotech R&D 41

Future models for the pharmaceutical industry 42

Smaller patient populations 42

Diagnostics and improved efficacy 43

Global markets, both branded and generic opportunities 44

Global market projections 44

Opportunities for generics and branded generics 45

Conclusion 46

Chapter 2 Pharmaceutical employment trends in developed nations 50

Summary 50

Introduction 51

US pharmaceutical and medicine manufacturing, 2008-2018 52

US pharma manufacturing background 53

US pharma manufacturing employment 54

US pharma manufacturing occupations 56

US pharma manufacturing employment change 56

US scientific research and development services, 2008-2018 58

US SRDS background 58

US SRDS employment 59

US SRDS occupations 59

US SRDS employment change 61

Conclusion 64

Chapter 3 Legal regulations and considerations 66

Summary 66

Introduction 67

General legal requirements for workforce reductions 67

North American regulations 69

US 70

US federal 71

US states and territories 75

Canada 79

Canadian provinces 80

European regulations 81

UK 82

Ireland 83

France 84

Germany 85

Bulgaria 86

Hungary 87

Asian regulations 87

Japan 88

China 88

India 89

Singapore 90

Beyond legal requirements 90

Conclusion 91

Chapter 4 Managing employees through workforce reductions 94

Summary 94

Introduction 94

The employee 95

Significant factors 96

Communication 97

Phases of a workforce reduction 97

Before 97

Day of announcement 98

Initial transition 98

Later transition period 99

Case study 100

2009 Sanofi-Aventis US salesforce reduction near US Thanksgiving holiday 100

2009 Sanofi-Aventis US sales background 100

Events over the Thanksgiving weekend 101

Review of Sanofi-Aventis' timing 101

Conclusion 102

Chapter 5 Biotech and pharma workforce reductions 104

Summary 104

Introduction 104

Insight into employees 105

Biotech culture 105

Pharma culture 106

Survey of concerns regarding impact of workforce reductions 107

Strategies for employee retention and motivation 109

Training and opportunities 110

Financial incentives 110

Workplace conditions and environment 111

Maintenance of previous employment benefits 112

Strategies for workforce reduction 112

General strategies 112

Rigorous environment for quality R&D and manufacturing 113

R&D 114

Productivity 114

Administrative 115

Sales 115

Manufacturing 116

Case study 116

J&J product recalls at its McNeil Consumer Healthcare division 116

J&J and McNeil background 117

"Systemic quality issues" and potential phantom recall 117

Review of contributing factors 118

Conclusion 119

Chapter 6 R&D and manufacturing site closures 122

Summary 122

Introduction 122

Facility closures 123

R&D facility closures 124

Manufacturing facility closures 124

Survey of concerns and management methods with regard to facility closures 125

Case studies 128

Eli Lilly divests and outsources a manufacturing facility in one move 129

Lilly and the Tippancoe facility 129

Sale to Evonik with a nine-year products and services agreement 130

Lilly strategy: divest operating facility to a strong partner 130

Sanofi-Aventis training for the biologics transition in France 131

Sanofi-Aventis in France 131

Sanofi-Aventis to maintain a constant number of jobs in France,

2010-2014 131

The Sanofi-Aventis goal: champion of European vaccine production 132

New York tax break issues for Pfizer closure and workforce reduction 133

Pfizer closure of Brooklyn plant and employment reduction in NYC 133

Pfizer versus Manhattan 133

Tax breaks and negative consequences 134

Conclusion 135

Chapter 7 Outsourcing and offshoring for research and manufacturing 138

Summary 138

Introduction 138

Managing R&D workload 139

R&D outsourcing 140

Maintaining quality 140

Location of contract research organization 141

Offshore research and manufacturing 141

Rule of Law in different countries 142

Rule of Law in India 143

China and India 144

China for small-molecule drugs and R&D 144

India for small-molecule drugs and vaccines 145

China and India drug quality issues 146

Case study of outsourced manufacturing 148

The generic drug company Teva 149

Teva background 149

Teva strategy for quality manufacturing 150

Teva future expansion 151

Conclusion 151

Chapter 8 Long-term risks of offshoring 154

Summary 154

Introduction 154

Long-term risks of offshoring discovery R&D 155

Long-term risks of offshore manufacturing 155

Risks of drug quality and safety 155

Monitoring of manufacturing, storage, and transportation 156

Quality - a marketing attribute in China 156

Dealing with nonmarket economies 157

Dialogue with governments 157

Conclusion 158

Appendix 159

Primary research methodology 159

Survey rating experienced respondent concerns for workforce reductions and facility closures in the health industry 159

Abbreviations 160

Index 164

Footnotes 167

List of Figures

Figure 2.1: Major occupational categories in US pharmaceutical and medicine manufacturing, May 2008 56

Figure 2.2: US pharmaceutical and medicine manufacturing employment of wage and salary workers by occupational category, 2008-2018 57

Figure 2.3: US scientific research and development services employment of wage and salary workers by occupational category, 2008-2018 62

Figure 2.4: Additional details for current and projected US scientific research and development services employment of wage and salary workers by occupation, 2008-2018 63

Figure 5.5: Individual rating of concerns regarding workforce reductions by layoff-experienced respondents in the health industry 108

Figure 5.6: Selection of top two concerns regarding workforce reductions by respondents experienced in the health industry 109

Figure 6.7: Individual rating of concerns for facility closures 126

Figure 6.8: Selection of top two concerns for facility closures 126

Figure 6.9: Methods used for managing facility closures in the health industry 127

Figure 6.10: Selection of two most important methods used for managing facility closures 128

List of Tables

Table 1.1: US R&D spend domestic and abroad, 2006 27

Table 1.2: US drug development costs for novel therapeutics 30

Table 1.3: Global pharma mergers and acquisitions, 2000-2009 34

Table 1.4: Global biotech mergers and acquisitions, 2000-2009 35

Table 1.5: Representation of protein therapeutics in global top-selling drugs, 2010 and 2014 38

Table 1.6: Active US clinical trials by select disease area, 2008 40

Table 1.7: Global pharmaceutical market by region, 2008 and 2020 45

Table 2.8: Overview US pharmaceutical industry employment, 2006 51

Table 2.9: US pharmaceutical employment by state/territory, 2006 52

Table 2.10: US pharmaceutical and medicine manufacturing employment of wage and salary workers, 2008-2018. 55

Table 2.11: US scientific research and development services employment of wage and salary workers, 2008-2018 60

Table 2.12: Additional details for US scientific research and development services employment of wage and salary workers, 2008-2018. 61

Table 3.13: International comparison of overall employment protection by OECD indicators, 2008


Table 3.14: Comparison of US federal and 2003 California WARN 76

Table 3.15: Comparison of US federal and 2005 Illinois WARN 77

Table 3.16: US federal and 2007 New Jersey WARN 78

Table 3.17: Comparison of US federal and 2010 New York state WARN 79

Table 3.18: Gross unemployment benefits as a proportion of gross annual income by country, February 2010 91

Table 4.19: Rating of major life stressors 96

Table 7.20: Cross-country comparison of Rule of Law indicator (percentile) from the Worldwide Governance Indicator project, 2008 143

To order this report:

Pharmaceutical Industry: Strategies for Managing Pharmaceutical Workforce and Site Reductions: Analysis of legal, productivity, and quality control issues

Pharmaceutical Business News

More Market Research Report

Check our Company Profile, SWOT and Revenue Analysis!

Nicolas Bombourg



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Intl: +1 805-652-2626

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