AstraZencca (AZ) is to cut 1,600 jobs in a global restructuring of its R&D operation, including 700 UK jobs and 650 in the US.

In the UK, AZ will shut down its R&D operations at Alderley Edge and relocate over 1,000 jobs to a new global HQ in Cambridge.

In the US, it will shift its Global Medicines Development Group from Delaware to Maryland.

The restructuring, which will take three years to complete, will concentrate the company’s R&D operations in three key global centres.

It follows a quarter in which global sales fell by 16% due to patent expiry – and while AZ continues to see R&D as a vital function it is keen to reduce costs.

AZ’s long-term growth has resulted in a structure that Mene Pangalos, Executive VP for Innovative Medicines, described as “too spread out and too diffuse”.

Research work at the Alderley Park site, which Zeneca took over in 1993 as a divestment from ICI, will cease. Some 700 non-R&D roles will remain at the site, while 1,600 R&D roles will be relocated and 550 will be cut.

This decision contrasts with the prospect in October 2012, when AZ secured a £5m grant from the Regional Growth Fund to develop a bioscience park at Alderley Park and Martin Mackay, AZ’s President of R&D, claimed: “Alderley Park is a site of critical importance to our global R&D organisation.”

The current decision to focus R&D in Cambridge reflects the growing importance of biotech clusters for global pharma.

Pascal Soriot (pictured), CEO of AZ, commented: “Cambridge, which boasts strong links with London-based research institutions, is a world-renowned bioscience hotspot that rivals the likes of San Francisco and Boston.

“I believe the investment greatly increases the chances that the next generation of innovative medicines will be invented and manufactured in Britain.”

GlaxoSmithKline (GSK) plans redundancies in its European sales and administration force to help it cut £1bn from its annual European, R&D and manufacturing costs by 2016.

The London-based pharma giant said it will achieve most of the cost reductions through technical improvements in its R&D and manufacturing processes.

According to CEO Andrew Witty, the cost savings plan has been driven by drug pricing pressures across Europe as the recession continues to worsen.

He also noted that job cuts would primarily affect sales and administration staff across Europe, but did not indicate the likely numbers.

Witty emphasised that GSK has six new drugs (including treatments for HIV, type 2 diabetes, melanoma and asthma) under review by regulatory bodies, with late-stage clinical trial data expected for another nine products within two years.

The company aims to launch up to 15 products within three years, he told business analysts. But given the economic uncertainties affecting Europe, 2013 would be a year of “twists and turns” and “not everything is going to go smoothly”.

According to a company spokeswoman, the technical and staffing changes (including redundancy payments) will have a combined one-off cost of £1.5bn, and will primarily be focused on Europe.

Nearly three-quarters of NHS staff who have been made redundant as part of the health reforms are female, research has found.

Figures show that of 74% of staff who have lost their jobs as part of the health shake-up are women.

Jamie Reed, Labour’s Shadow Health Minister, said the “Government is letting women bear the brunt” of its controversial reforms.

Data from the report prepared for the NHS Commissioning Board on the DH’s ‘people tracker’ revealed that employees over the age of 40 also were more likely to be made redundant than younger colleagues. Research found that 77% of staff who were received redundancy packages were over the age of 40.

Between 1 April and June 30 this year, figures show that 105 staff were axed from primary care trusts and strategic health authorities. Fifty of these were compulsory redundancies, 77% were women and 78% were aged over 40 years old.

“As the Government's reorganisation inflicts chaos on the NHS, its women employees who are being hit hardest,” said Jamie Reed.

The US government thinks pharmaceutical sales reps are not selling, but rather promoting. Maxine Vaccine asks whether the pharma industry could do itself a favour by agreeing.

It’s a hard life being a pharma industry CEO. There you are being passionate about improving patient outcomes and helping the weak and the wounded, and people look at you like you’re just in it for the profit. Don’t they realise those million-dollar bonuses are to compensate you for the sleepless nights you experience every time you make a few thousand people redundant? Can’t anyone feel your pain?

Then there is the emotional stress of a hostile takeover. Sometimes these little no-mark biotech companies just don’t know what’s good for them. And in the interest of those patient outcomes you feel passionately about, you have to show them the error of their ways by appealing directly to their shareholders to let you take over and take care of business. And are they grateful?

And then, just to add insult to injury, the interfering US government tells you that you should be paying your sales reps overtime because – wait for it – they’re not really selling at all. Outside salesmen are exempt from the US labour laws on overtime, because they get commission. But suddenly all your reps are claiming back pay for the ‘overtime’ they have spent schmoozing customers, talking trash on the phone and burning rubber on the highway – and the Labor Department is backing them up, saying they spend their working lives promoting products rather than selling them.

Hence the amusing exchange in the US Supreme Court where GSK’s lawyer said the plaintiffs were “two pharmaceutical sales representatives”. He clarified the point: “They were hired for a sales job. They were given sales training. They attend sales conferences. They are assigned to sales territory, and they are evaluated and compensated as salespeople.”

One of the court justices replied: “And they don’t do sales. Your long list sort of stopped one step short. They don’t make sales.”

Then another justice struck back with “They look like sales representatives to me.” We can be thankful she didn’t go into too much detail on that. I still have nightmares about the hotel bar at my first sales conference.

Rather cutely, she added that the work of drug sales representatives “includes dinners. Entertainment. Maybe golf. If you’re right, would the time on the golf course get time and a half?”

Enough already. It makes you want to move to a country where businessmen run the government instead of the other way round. Like the UK.

But every challenge is an opportunity, as you’ve told your board of directors a thousand times. And in this distinction between the salesman who exchanges goods for cash and the ‘detailer’ who influences purchasers to request your company’s products from a local pharmacy (or a not so local one, perhaps one thousands of miles away – but let’s not go there), there is a precious nugget of commercial insight for the 21^st century.

Your sales force do not sell. They manage key accounts. They access changing markets. They build partnerships with economic prescribers and healthcare managers. They build customised solutions. They position your company as a consultative partner in the provision of care.

Until it comes to pay day. Then they’re just jumped-up till girls and till boys with a few corporate perks. What do they expect?

The industry’s sales model has changed.

Has it?

Maxine’s views are not necessarily those of Pharmaceutical Field.

Pfizer Inc. has cut its redundancy payouts to US employees by a third just before its anticipated spring round of layoffs.

Employees of the world’s largest drug company will see their basic severance pay cut from 12 to eight weeks.

Other aspects of Pfizer’s severance package will remain in place, but employee health benefits will now last eight weeks instead of a year.

Pfizer CEO Ian Read (pictured), whose pay package rose by 44% in 2011, has promised to cut $1bn from global operations in 2012.

This continues the slimming process that saw the company’s costs reduced by $642m in 2011.

Pfizer has already shed 20% of its total workforce since its acquisition of Wyeth in 2009.

An internal memo announcing the changes in terms and conditions noted: “We will continue to analyze all of our benefit programs to support our long-term competitiveness and the sustainability of benefits in today’s challenging business environment.”

The measure suggests that major job losses are planned, since the company is now taking steps to manage the cost of redundancy itself.

Global pharma giant AstraZeneca (AZ) its setting up a new ‘virtual’ neuroscience R&D unit within its Innovative Medicines division to seek effective therapies for diseases such as Alzheimer’s and Parkinson’s through ‘open innovation’.

The new unit, based in Boston, US, and Cambridge, UK, will consist of 40–50 AZ scientists working with an external network of academic and industry partners.

Neuroscientist Dr Mike Poole, who has extensive experience in pharmaceutical R&D, has been appointed to lead the unit.

This initiative is part of a major AZ restructure that will see 2,200 R&D jobs axed, with the company hoping to “pioneer a new approach to neuroscience drug discovery and development” – which it says has “proved elusive” in the past.

AZ’s strategy reflects the growing industry trend towards the ‘open innovation’ model, whereby a company broadens its expertise by collaborating with the wider research community.

Dr Pool joins AZ from US neuroscience research company Link Medicine. He has held senior research posts at Wyeth and Pfizer, as well as being Chief Medical Officer at biotech company Hypnion.

Dr Menelas Pangalos, Executive VP of AZ’s Innovative Medicines division, said: “AstraZeneca is deeply committed to neuroscience research and the discovery and development of new treatments for a full range of neurological diseases including Alzheimer’s, neuropathic pain, depression and Parkinson’s.

“While many companies have exited or scaled back efforts in this high-risk area, we will step up the search for new medicines to help people with neurological and psychiatric diseases. We are confident this new approach will enable us to tap the most exciting science and discoveries that exist in labs around the world.”

For AZ, the new ‘virtual’ R&D unit will replace existing neuroscience R&D teams at Montreal, Canada and Södertälje, Sweden. The Montreal site will close, but the Södertälje site will retain its manufacturing and commercial functions.

Between 1,000 and 1,500 jobs are expected to be lost at Teva Pharmaceutical Industries as part of the company’s cost-cutting measures.

Reports from Israel claim the majority of the layoffs will be made in the US and Europe and mainly focused in Teva’s recently acquired Cephalon’s generic business.

The reports say that Teva is hoping to raise $500 million in synergies from its takeover with job losses expected to raise the majority of its target.

Teva has already said it is planning to cut sales, marketing and administrative expenses by $300 million, R&D by between $120 million and $150 million, and production costs by $50 million to $80 million. R&D savings would be achieved by cutting duplicate operations, the company said.

Teva has a history of job losses following takeovers of generic companies. In 2008 it bought US generic specialist Barr and reduced its workforce by 10%, reports say.

A reduction of 1,000 jobs at Cephalon would represent a loss of 27% roles before the takeover. But one company where job losses will be made, the reports say, is at Mepha, the Swiss generics manufacturer Cephalon bought last year. The company had 620 jobs prior to the acquisition.

There’s a lot of talk at the moment about getting in the ‘real world’. The ambitions of the NHS reforms, which this month survived a Commons vote and are now headed for the Lords, have drawn criticism from inside and outside the health service as not being practical in the real world of patient care.

In turn, the ABPI, along with countless others, has cited the reforms’ ambitions to deliver world-class outcomes as a major driver in the need to augment the current clinical trial model to make provision for the collection of ‘real world’ data. But, say commentators, developing real world data means the industry must ask its customers real world questions, rather than simply work to its own agenda.

For medical sales professionals, this is your selling environment – and the real world you face every day is clearly in a state of flux. But out of confusion can often come clarity. The messages that you take to market need to be shaped in the round. It is no longer acceptable for sales professionals to simply inherit brand messages from their colleagues in marketing – they must help inform value propositions and commercial strategies by sharing the important information they glean from the real world dialogue they have with their customers.

And by challenging the age-old customer perception that the NHS cannot and should not work in partnership with industry. The NHS must be made to realise that it cannot deliver the required improvements in quality and patient outcomes on its own. In this regard, NHS customers too need to get in the real world. And it’s the job of the pharmaceutical sales professional to help get them there.

Chris Ross, Editor

If I were a rich man
PS. The latest results of the Pf Company Perception, Motivation and Satisfaction Survey show that, despite a median basic salary well in excess of the national average and annual total remuneration packages that make the profession among the best-rewarded in the UK, a high volume of medical sales professionals remain dissatisfied with their salary and want more. Of course, we all want more, it’s human nature. But in an era characterised by cuts, job losses and high unemployment, the Lionel Bart’s Oliver approach of requesting more seems relatively misplaced at the present time. Perhaps pharma’s sales people should consider getting in the real world too? It’s just a thought.

Keeping hold of key members of staff has always been an issue for successful organisations. To avoid head-hunters, Anton Franckeiss explains valuable measures to increase employee retention and satisfaction.

Although the pharmaceutical industry is one that consumers tend to depend on to provide instant cures or magical remedies to our all too human frailties, it actually operates to a longer timeframe. Any new treatment for our remedies may take only seconds to swallow, but will have been in development for many years, and possibly even decades. But despite its foundation in long-term projects, the industry also experiences higher than average staff turnover rates – a circumstance that the industry shares with IT and financial services. While the requirement for specialist knowledge and professional skills is a common factor across all three of these sectors that should not be ignored, human resource (HR) professionals within the industry should resist the temptation to believe that there is a single cure that can be prescribed and administered.

Although the analogy may be a simplistic one, especially in the industry context, adopting a holistic view that sees retention rates as one of the vital signs of the ‘patient’ (ie the workforce of each pharmaceutical company) may be helpful. Recent surveys, both by Pharmaceutical Field and by the Chartered Institute of Personnel and Development, have shown a slowing of staff turnover rates in the industry. Yet the reasons may be at least partly a reflection of the broader labour market and economy.

In an era of slow economic growth after a sharp recession, employees are seeing redundancies elsewhere – or even closer to home – and may have drawn the conclusion that the metaphorical frying pan might be a happier place to be for the medium-term than the unknown quantity of the metaphorical fire. There is, however, no room for complacency here. If the factors at play are limiting turnover rather than actively encouraging retention, the ‘condition’ could flare up again at short notice depending on movements in the broader economy: a chronic condition, after all, requires monitoring and management to ensure that any chances of it becoming acute are minimised.

Road to recovery

The analogy of a chronic condition, however, should be challenged. A continuing situation of poor retention does not imply that this either must simply be lived with or will inevitably get worse. There is no reason that the prognosis should be gloomy, although a combination therapy approach will be required and the regime will need to be maintained for some time before improvements in the underlying condition are secured. The key to success lies in the depth of understanding that the doctor – in this case the HR functions of companies in the industries – can acquire about their patient.

Without research, dialogue and communication, companies can too easily assume that they understand the retention factor priorities of their workforce, while the employees actually see the outlook rather differently. A 2006 survey by Talent Drain, for example, showed that employees rank ‘cooperation’ as the second most important factor, while employers listed this in ninth place.

Employers also typically overstate the impact of pay and financial rewards, while underestimating the importance to employees of opportunities for personal growth. What appears as a mission critical role contribution through one end of the telescope looks more like one component of an on-going personal biography from the other. In an industry that embraces great diversity of roles – from sales to scientific specialists – there is likely to be a similar diversity of outlook – the intelligent response is to seek understanding rather than to assume that a single remedy can be applied in all cases. Feedback to HR from line management in different operational areas could be helpful here, so keep lines of dialogue open.

The right prescription

Employee motivation and engagement requires similar treatment; although recent surveys say suggest turnover is reduced, they also suggest what an earlier Pharmaceutical Field article, called The Fear Factor, highlighted. Pro-actively seeking to increase engagement will enhance the chances of turning a cure into a preventative approach. The highly engaged will be less easily tempted away when external economic factors change. Again, an appreciation of potential complexity will be helpful. Scientific staff may be balancing a need to supervise and manage others and commercial encouragement from the organisation to develop their leadership skills with their personal commitment to their professional discipline. Acknowledging such a potential conflict of factors will be a far more productive way of identifying motivational approaches than failing to address it.

There are also industry-specific challenges to address, one of which was highlighted in an interview between the BBC’s Evan Davis and GSK Chief Executive Andrew Witty in the former’s recent book, Made in Britain: “One of the things we say to our scientists is that you have to be comfortable with failure. [There are] great scientists in this company who will never succeed in their entire career … Of 10,000 new molecules that we might synthesise, so that we might create 10,000 possible new drugs, probably one will be a drug.”

Strategies that promote innovation – the use of multi-disciplinary project teams where each can make their own distinct contribution and gain inspiration from other – can help here in other ways. But also allow staff with specialist skills to receive peer, as well as line management, feedback on the value of their contribution. It was a point by Alistair Flaister in a People Management article, Organisational learning: The social network, when he made the important point that: “The real engine of creativity and organisational success is to be found in internal networks of friendship and collaboration.”

Line managers have other contributions to make, not least in listening acutely and in building a supportive and encouraging team culture. It’s a point underlined in the 2010 Work Foundation report, Exceeding Expectations: the principles of outstanding leadership, which identified two elements common to the approaches of outstanding leaders in creating a working environment:

The first is the need to develop an open and supportive atmosphere to create the conditions for trust and respect, and the second is to ensure the workplace enabled success and satisfaction.

Part of the latter element may require support from HR in terms of fresh thinking. Depending on the severity of the case, HR might also ponder the benefits of making a referral to a specialist consultant. Helping specialist staff to make the transition to a leadership role is not simply a progression or promotion through a series of levels of leadership. It requires them to make a fundamental transition from development of a professional discipline to that of a broader organisational and commercial role. It also requires the transfer and application of new behaviours that challenge and enhance their performance and contribution. Two other factors that The Work Foundation found as common to outstanding leaders is a willingness to be flexible in their approach to process, and a willingness to adapt roles to give individuals the maximum opportunity to achieve personal growth and job satisfaction. An organisational willingness to be similarly flexible in role definition and organisational design can support good leaders within the company to deploy this approach successfully.

Never say no

Think of a talented individual that the company should seek to retain, and then imagine how they might feel if they heard the words “I’d love to be more flexible, but I’ve spoken to HR and they said …” It’s also helpful to remain mindful that disengagement is unlikely to be a proactive personal choice – employees are more likely to become disengaged as a reaction.

Ultimately, employee retention is not so much a condition as a symptom. An indicator that employee engagement is low, that opportunities to satisfy personal motivations are too limited, that opportunities for progression are overly limited or unclear, or that employees are not receiving positive feedback on their performance and/or contribution when praise is due. The answer is not to treat the isolated symptom, but to investigate the underlying condition and develop a comprehensive talent management strategy that will systematically improve organisational health. Even in an industry where specialist skills are a key requirement in many roles, an employee value proposition and a recruitment strategy that identifies employees with a strong cultural fit are still important requirements. Any industry dependent on innovation and intellectual property should appreciate that human resources are its critical input. And most employees – who will, after all, have chosen to make an application to join the organisation and done so in good faith – are ultimately looking for something relatively straightforward: regular reminders of several good reasons to stay. That, of course, is easy to say, but there’s something positive to be said for making it easy to do.

Anton Franckeiss is the Managing Director of ASK Europe.

The DH is to be trimmed from 14 directorates to just five.

Under the new structure the five directorates will be system design, finance and the NHS; social care; public health; partnership and engagement; and DH operations.

The reshuffle is expected to result in job losses with a DH spokesperson saying they were “assessing the impact of the future structure” before committing to any redundancies and reductions.

It was estimated back in January that up to 2,500 positions would be axed following the reduction of arm’s length bodies and other DH posts.

Information published by the DH showed that 75 senior posts have already been “eliminated” since March, saving more than £7 million.

Three director general posts for research and development, finance and chief operating officer and policy and strategy have already been removed – the former downgraded to a director level post commanding a lower salary. In total, 55 or the 75 eliminated senior posts came from the two predecessor directorate.