Employment Implications Of Mergers, Restructuring

The spate of mergers, acquisitions and company restructuring announced in recent times by pharmaceutical manufacturers is clearly intended to make bigger, better and more profitable companies in an environment of government-imposed price cuts and squeezes. However, there is a serious negative implication of this in terms of employment within the pharmaceutical industry.

As has been constantly reported, governments everywhere are facing increasing demands for health care as the number of older people still living increases - partly as a result of improved medical care - and the cost of new technologies and therapies rises, and this has resulted in heavy financial burdens, be it for national health services or health insurance systems.

Meanwhile, the pharmaceutical industry, which for many years was castigated for its enormous profits, became the ideal target for governments to attack in terms of curbing growth or reducing their health care spending. Government moves have included price cuts, limited (negative and positive) lists, encouragement of generic substitution and putting the brake on new drug approvals, all of which have put a strain on drugmakers who, at the end of the day, still have to turn in a profit and pay dividends to shareholders.