Bayer is the latest member of Big Pharma to admit that it must cut jobs to maintain any level of profitability. The company will reduce staff by 4500 with 1700 of those coming in Germany. The cuts are expected to save the company about $1 B annually when they are implemented.
Bayer says it has been forced into this position by familiar forces cited by other members of Big Pharma. Namely, the culprits are:
- Increased use of generics
- Rising R&D costs
- Healthcare reform (i.e. manage pricing)
All of these factors eat into margins and profitability, and with not enough new products coming through the pipeline, cuts are inevitable. Bayer also cited a new Moody's Investor Report that dourly predicts a negative outlook for the pharmaceutical industry over the next 10 years.
Posted by Bruce Lehr November 19th 2010.