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Since 2022, layoffs have become commonplace. The ongoing global banking crisis, coupled with pre-existing factors such as the Ukraine-Russia conflict, inflation, looming recession and rising interest rates have made the business environment even more volatile and daunting. The kinks in the supply chain got exacerbated by China’s Covid policy. And all these economic challenges compelled companies to retrench employees the world over. While the surge in layoffs has been more apparent in the technology sector,
the pharma sector has also been facing the headwinds.Though the biopharma sector has
experienced significant growth due to new technologies such as gene editing,
cell therapy, messenger RNA and the Covid-19 vaccines and therapies,
some drugmakers began to see revenues of their Covid products fall
significantly with a drop in cases.However, job cuts in the pharma industry aren’t limited to companies that make Covid products. Several others have announced job cuts citing restructuring, trial failures and holds, termination of deals, facility shutdowns and reprioritization of projects.In the first quarter (Q1) of 2022, we saw
around 30 pharma companies announce layoffs. In Q1 of 2023, the corresponding
number went up to over 50. Overall, more than 100 biopharma companies had
announced layoffs in 2022.View Biopharma Layoff Tracker: 2022–Mid April '23 (Free Excel Available)Pandemic-hit Grifols to cut 2,300 jobs;
Catalent, Thermo Fisher lay off hundredsSpanish pharma Grifols has announced the biggest layoff of 2023 so far — it plans to axe 8.5 percent of its global workforce, or around 2,300 employees, to save €400 million (US$ 427 million) annually. The Covid-19 pandemic dealt a severe blow to its plasma-derived medicines as blood collection collapsed around the world in 2020 and 2021. The drugmaker is now working on a “more efficient” platform to obtain plasma and reduce its expenses.French vaccine maker Valneva said it will lay off 20 to 25 percent of its workforce in order to save US$ 12 million. Valneva cited clinical trial costs and expedited winding down of Covid vaccine-related activities as reasons behind the layoffs. Some CDMOs have been hit equally badly.
For instance, Catalent, which has played a critical
role in producing Covid-19 vaccines and therapies, has cut around 600 jobs across
multiple facilities in the US, and Thermo Fisher Scientific, a
producer of Covid testing kits, has laid off around 500 employees across various locations in California
between January 2022 and the middle of April 2023.Meanwhile, US-based Axcella said it will lay off 85 percent of its staff as it ended work on
its NASH program to focus on developing a long Covid therapy. Last July,
another US company, Inovio, said it will cut 18 percent of its workforce due to its troubled Covid program. And this year, it plans
to downsize again and focus on its human
papillomavirus (HPV) program.View Biopharma Layoff Tracker: 2022–Mid April '23 (Free Excel Available)Novartis to cut up to 8,000 jobs, J&J to downsize as part of restructuringBig pharma companies such as Novartis and Johnson & Johnson (J&J) have announced plans to restructure their businesses, and job cuts are a part of that exercise. In April 2022, Novartis announced plans to save at least US$ 1 billion by 2024 by combining its
pharmaceuticals and oncology business units to form a new Innovative Medicine
unit with the goal of achieving sales growth of
at least 4 percent through 2026. It also revealed plans to spin off Sandoz to focus on patented prescription medicines. As a result of these changes, the Swiss drugmaker announced plans to eliminate up to 8,000 jobs.Novartis is moving ahead with the job
cuts and has announced plant closures in the US. In addition, Novartis slashed 400 jobs in India following a new sales
and distribution agreement with Dr. Reddy’s Laboratories.Similarly, as J&J moves ahead with plans to spin off its consumer health, it is cutting jobs. J&J is also restructuring the infectious disease and vaccine groups of its Janssen division and has planned global layoffs. Fate Therapeutics, a former partner of J&J, laid off 315 staff after ending its agreement with
the company. Gilead has also cut jobs at
the former Immunomedics headquarters in New Jersey and
relocated the site to a larger space with no manufacturing.View Biopharma Layoff Tracker: 2022–Mid April '23 (Free Excel Available)Merck,
BMS cut staff at acquired companies; Biogen downsizes due to Aduhelm, TecfideraMany retrenchments in the biopharma
sector have been a result of acquisitions. Merck laid off around 143 employees from its Acceleron division in Cambridge,
Massachusetts, shortly after acquiring the Boston-based company for US$ 11.5
billion in March 2022.BMS has also laid off 261 employees across
two San Diego sites following its acquisition of Turning Point Therapeutics for
US$ 4.1 billion. Similarly, US biotech Flexion Therapeutics laid off 110 employees, after being acquired by Pacira BioSciences. Six months after acquiring Kadmon Holdings, Sanofi is closing its Kadmon New
York facility and laying off 25 employees. Sanofi-Aventis Korea is reducing its workforce
through a voluntary retirement scheme. And AbbVie laid off 99 staffers from a single facility in Irvine (California), which was once an Allergan facility (a company it acquired in 2019 for US$ 63 billion).In 2022, Amgen made some high-value acquisitions and agreements – it bought rare disease drugmaker, Horizon Therapeutics, for US$ 27.8 billion and ChemoCentryx for US$ 4 billion as part of its growth strategy.
But this year, Amgen has announced layoffs on two occasions, retrenching a total of around 750 employees to realign its expenses in the
face of intensifying pressure on drug prices and high inflation. And Roche’s Genentech unit has shut down operations at its production facility in South San Francisco, laying off 265.In December 2021, Biogen had announced plans to lay off
up to 1,000 staffers in an effort to cut about US$ 500-750 million in costs following the lower-than-expected sales of its controversial Alzheimer’s disease drug, Aduhelm, This year, Biogen has trimmed
its multiple sclerosis team due to generic competition to its blockbuster drug Tecfidera. The job cuts were necessitated after the company failed to defend the market exclusivity of the drug through several lawsuits in the US.Japanese drugmakers Daiichi Sankyo and Eisai have shut down their R&D units in the US. While Daiichi has closed its R&D unit in San Francisco that employed 60 people, Eisai has closed its oncology R&D wing in the US, H3 Biomedicine, a move that has resulted in the loss of 88 jobs.View Biopharma Layoff Tracker: 2022–Mid April '23 (Free Excel Available)Drug
rejections, trial failures lead to job cuts at Akebia, Y-mabs, SpectrumSeveral companies, such as Akebia, Y-mabs, Spectrum, have laid off sizable portions
of their workforce due to drug rejections by the US Food and Drug
Administration (FDA). Akebia laid off 42 percent of its workforce after FDA rejected its anemia drug vadadustat. Similarly, Spectrum laid off
most of its R&D team after FDA rejected its drug poziotinib in November 2022. In January
2022, it had terminated 30 percent of its
workforce. The same was the case with Y-mabs — a substantial number of employees lost their jobs after FDA rejected its drug omburtamab. In April 2022, Bluebird bio reduced its workforce by 30 percent to cut costs. Its gamble paid off as the FDA approved two of its cell and gene therapies – Skysona and Zynteglo – a few months later.Meanwhile, Galapagos dropped its kidney and fibrosis programs to focus on oncology and immunology candidates, laying off around 200 staffers. And disappointing data from a late-stage trial of its drug for symptomatic transthyretin amyloid cardiomyopathy (ATTR-CM) — avramidis — forced BridgeBio to announce retrenchment of an
undisclosed number of employees last year.View Biopharma Layoff Tracker: 2022–Mid April '23 (Free Excel Available)Our
viewThe biopharma industry grew impressively
in 2022. Our analysis of combined (global) revenues of 15 leading (randomly
selected) drugmakers in 2021 and 2022 reveals an impressive growth in revenues
of around 7 percent. However, in 2023, a third of these drugmakers expect a
drop in revenues, with Pfizer expecting its turnover to drop
by over 30 percent this year. The reduced guidance may result in more layoffs.As we move into Q2, the layoff trend
continues unabated. Last month, Thermo Fisher announced it will lay off 218 employees at
three of its locations in San Diego, California, due to reduced demand for its
Covid-19 products. These facilities will close in June. Japanese drugmaker Sumitomo and its subsidiary Sunovion Pharmaceuticals
have announced plans to lay off 223 workers.The current business environment is not likely to cheer the job market. We have to wait for the cycle to turn.
Impressions: 2209
https://www.pharmacompass.com/radio-compass-blog/drop-in-covid-sales-trial-failures-restructuring-trigger-steep-rise-in-layoffs-in-q1-2023
#PharmaFlow by PHARMACOMPASS
04 May 2023
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Nearly every
year, drugmakers ring in the new year with drug price increases in the US. This
year too, prices of over 450 prescription
medicines increased by an average of around 5 percent at the start of January.
This, when high drug prices have been one of the biggest political issues in
the US over the last few years.
PharmaCompass decided to usher in 2022 with a review of the US Medicare Part D Prescription Drug data recently released by the Centers for Medicare and Medicaid Services (CMS) for calendar year 2019. Using the available data, we have developed our own dashboard to show recent trends in consumption of prescription drugs. With this analysis, we hope our readers will get a better understanding of the world’s largest market for pharmaceuticals, as also a fix on where it may be headed.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Rising healthcare, drug spends in US
Over the
last several years, we have repeatedly heard political leaders in the US
complain about high drug prices. Yet, drug prices and healthcare spends have
risen unabated.
America’s National Health Expenditure Accounts (NHEA) includes annual expenditures on healthcare goods and services, public health activities, the net cost of health insurance, and investment related to healthcare. In 2019, America’s national health expenditure (NHE) grew by 4.6 percent to US$ 3.8
trillion, accounting for 17.7 percent of the gross domestic product (GDP).
During the year, prescription drug spend increased by 5.7
percent to US$ 369.7 billion. In comparison, Medicare spend grew 6.7
percent to US$ 799.4 billion.
President
Joe Biden recently stressed on the need to cap the prices of essential drugs,
and said that the average American pays the highest prices for prescription
drugs anywhere in the world. Americans pay 10 times as much as other countries for life-saving insulin — the top selling prescription drug covered by the Part D program.
Pharma
companies, on the other hand, have vehemently argued against any price cuts in
the US, saying price cuts would hinder drug research and development for all
diseases.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Patented drugs account for 80.3 percent of total Part D spend
Medicare is the US federal government’s program that
provides health insurance to most people who are 65 years
or older. Medicare’s Part D plan provides outpatient drug coverage through private
insurance companies that have contracts with the federal government. Eligible
people have to choose and enroll in a private prescription drug plan for Part D
coverage. Medicare Part B, on the other hand, covers a wide variety of
medically necessary outpatient services and some preventative services.
Prescription
drug coverage under Part D reached US$ 183 billion in 2019 — a growth of around 9 percent over 2018, when spending was US$ 168 billion. Spending
on patented drugs in 2019 accounted for around US$ 147 billion or 80.3 percent
of the total spend for the year. Generic drugs made up for the remaining 19.7
percent (approximately US$ 36 billion). In 2018, generic drugs worth US$ 35.8
billion were sold under Part D, accounting for 21 percent of the total spend
under the program.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Eliquis ranks highest on Medicare’s brand drug spend
Under Part
D, endocrinology and oncology were the two therapeutic areas that generated
maximum revenue for pharma companies, driving home sales of over US$ 31.8
billion and US$ 23.5 billion, respectively. Neurology drugs generated sales of
around US$ 22.9 billion.
Among branded
drugs, Bristol Myers Squibb’s anticoagulant Eliquis (apixaban) was the most selling drug in 2019 under Part D, notching up about US$ 7.3 billion in sales — a rise of US$ 2.3 billion or 46 percent over 2018.
Celgene’s cancer drug Revlimid (lenalidomide) roped in US$ 4.7 billion (up
by 14.6 percent), while another anticoagulant drug Xarelto (rivaroxaban) by Janssen Pharma — a unit of Johnson & Johnson — fetched US$ 4.1 billion (up 20.6 percent) in sales through Part D. AbbVie’s anti-rheumatic drug Humira and Sanofi’s diabetes drug Lantus saw sales of around US$ 3.7 billion each
under the program.
Amongst
generics, the largest selling drug under Part D (by dosage units) was metformin (diabetes), followed by gabapentin (seizure), PEG3350 with
electrolyte (gastroenterology), metoprolol (hypertension) and atorvastatin (cholesterol). In 2019, the
overall dosage units sold also jumped higher by 2.25 billion units to 111.35
billion.
The sales
ranking of Part D does bare some similarities with the global ranking of
highest selling drugs. In 2020, Humira had retained its position as the highest
selling drug in the world, generating sales of US$ 20.4 billion. Both
Eliquis and Revlimid had retained their ranking as the third and fourth most
selling drugs, bringing home US$ 14.1 billion and US$ 12.1 billion in global
sales in 2020.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Medicare’s inability to negotiate prices costs American taxpayers billions of dollars
Over the
years, drug companies have used Medicare’s
inability to negotiate prices under Part D to increase the prices of their
drugs significantly and rip off huge profits, a three-year-long US House
Oversight Committee investigation has revealed.
US taxpayers could have saved over US$ 25 billion in five years if the prices of just seven drugs — Humira, Imbruvica, Sensipar, Enbrel, Lantus, NovoLog and Lyrica — were negotiated by Medicare. Another US$ 16.7 billion could have been saved between
2011 and 2017 on insulin products manufactured by Eli Lilly, Novo Nordisk and Sanofi, which control 90 percent of the insulin market in the US, the committee’s report revealed.
Elsewhere in
the world, the same drugmakers are bending over backwards to get into medical
insurance programs. For instance, China reported that several international
pharma firms, many of them headquartered in the US, slashed the prices of their
drugs by up to 94 percent to get into the country’s national medical insurance coverage.
In the US — which accounted for around 46 percent of the global share of drugs in 2020 — senior citizens may have to pay more for medicines as the government announced a large hike in Medicare premiums for 2022
if an expensive Alzheimer’s drug, Aduhelm, is included in the list.
In order to
ensure inclusion in Medicare, Biogen slashed the price of Aduhelm by half — from US$ 56,000 to US$ 28,200 — just weeks before a crucial meeting called by the CMS. Clearly, this has set a precedent in an industry which is known for rampant price hikes and rarely for any price cuts. This could also be put forth as an example of what Medicare could achieve if it receives negotiation rights.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Our view
President
Biden's Build Back Better legislation,
which the House passed last month, is up for vote in the Senate. The
legislation contains provisions that would allow Medicare to negotiate the
prices of some expensive drugs, penalize drugmakers who raise prices faster
than inflation and cap out-of-pocket costs for insulin at US$ 35 per month.
However, chances of the bill being passed in its present form are slim.
Even if the
Senate passes the bill, Medicare would be able to negotiate the prices of only 10 prescription drugs and insulin products in 2025.
The number would increase over the years, reaching 100 in six years, and hence
forth grow by 20 drugs a year.
It seems like 2022 won’t be the last year when January 1 will be braced with price hikes in the US by drugmakers. Looks like they will continue to make hay while the sun shines.
View US Medicare Part D 2019 Drug Spending (Free Excel Available)
Impressions: 2625
https://www.pharmacompass.com/radio-compass-blog/america-s-drug-price-hike-conundrum-in-backdrop-of-2019-medicare-part-d-data
#PharmaFlow by PHARMACOMPASS
06 Jan 2022
