Another layoff of Bristol Myers Squibb highlights the dilemma of survival

Recently, after thousands of layoffs in China at the end of 2014, Bristol Myers Squibb, a US pharmaceutical company, once again revealed its layoff plan Two product groups of the tumor business division, including Taxol (Paclitaxel injection) and Bertin (Carboplatin Injection), were affected by the layoffs The total number of layoffs was nearly 1000 In addition, in March this year, Bristol Myers Squibb stopped customer hospitality, lecture fees, society sponsorship and other activities in all business departments of China to meet the compliance requirements of foreign funded pharmaceutical enterprises in China In the context of the rise of domestic generic drugs, in order to adapt to the increasingly fierce market competition environment, foreign pharmaceutical companies are focusing on the processing of their less profitable product lines, and using resources for the research and development of high-tech new original research drugs At the same time, in order to meet the requirements of "compliance", foreign pharmaceutical enterprises are organizing groups to enter the transformation period For Bristol Myers Squibb, it's not the first time that foreign pharmaceutical companies are suffering from layoffs At the end of 2014, Bristol Myers Squibb's layoff plan almost covered all business units in China: diabetes business unit, sales support department, liver disease business unit, tumor business unit, cardiovascular business unit, OTC business unit, etc., with nearly 1000 layoffs In the view of the industry, for the sake of cost control, it is the usual way for foreign pharmaceutical enterprises to cut off some production lines with poor profitability In response to the reasons for the layoff, Bristol Myers Squibb said that Taisu products have entered the mature stage of product life cycle, and nearly 60 generic drugs have appeared in the market For this product, the market space is gradually narrowing, the promotion of drugs has entered a bottleneck period, and the market value for the company has been very small According to the results of Bristol Myers Squibb's semi annual report this year, the sales volume only achieved a single digit growth, with a year-on-year growth of 6.68%, which is slightly behind the double digit growth of Pfizer, Bayer and Sanofi The industry believes that the reduction of departments that cannot create high added value will play a supporting role in improving the performance of Bristol Myers Squibb In fact, it's not Bristol Myers Squibb that has cut jobs Earlier this year, Johnson & Johnson, an American pharmaceutical company, announced that it would eliminate about 3000 jobs in the global medical device sector in the next two years Although whether China is within the scope of layoffs has not been confirmed by the relevant head of Johnson & Johnson, the decline in the performance of Johnson & Johnson's medical device Department has been significantly narrowed after the implementation of layoffs The layoffs highlight the survival difficulties for foreign pharmaceutical companies to reduce the number of layoffs and reduce the production line Yue Feng, an analyst in the pharmaceutical industry, told Beijing Business Daily that the main purpose of layoffs for foreign pharmaceutical companies is to reduce costs and boost performance In particular, for the Chinese market, the heavyweight drugs of foreign pharmaceutical companies face the pressure of patent protection expiration in Huapu, while with the progress of Chinese medicine (18.590, 0.00, 0.00%) technology, the low-cost generic drugs in the market also pose a big impact on foreign pharmaceutical companies Take Pfizer, the world's largest pharmaceutical manufacturer, for example Pfizer's performance growth in China has declined from 20% in the past few years to about 10% at present As the growth of the whole pharmaceutical industry slows down, the layoffs of foreign pharmaceutical companies in China will continue in the next three to five years With the conformity evaluation of domestic generic drugs entering the white hot period this year, the small and medium-sized enterprises with poor production capacity and poor product quality have also entered the period of centralized elimination After the wave, the quality of domestic generic drugs will be comprehensively improved Generic drugs with low price and guaranteed quality will undoubtedly impact some of the original research drugs of foreign funded pharmaceutical companies An executive of a foreign pharmaceutical company, who did not want to be named, told the Beijing Business Daily that at present, foreign pharmaceutical companies are generally facing the pressure of expiration of some product patents, and the growth rate in the Chinese market is also slowing down due to the impact of the general environment "As a foreign-funded pharmaceutical enterprise, in order to seek the growth of profits in the Chinese market, a strategy that has become the consensus of the industry is that the investment in innovative drugs must be greater than that in mature drugs, because we pay more attention to the opportunities brought by China's new drug listing reform." In order to improve the utilization efficiency of resources, the transformation characteristics of the innovative drug field that foreign pharmaceutical enterprises are not easy to copy through the reduction of business sectors are emerging In the context of the overall slowdown of the industry and the competitive efforts of local Chinese pharmaceutical companies, it has become a common consensus for foreign pharmaceutical companies to divest and sell their marginal businesses In February this year, Bayer handed over the right of commercial operation of its five brand drugs including "Baijiahei" to Shanghai Pharmaceutical (20.160, 0.00, 0.00%); in July, GlaxoSmithKline also divested the production and supply business related to urinary products in China Layoffs have also become an external manifestation of the divestiture of vulnerable sectors: last month, Merck, the pharmaceutical company, confirmed that it would lay off staff in order to explore a faster transformation of the biological field GE Healthcare also recently strengthened its scale in cell therapy by acquiring biosafe group SA In Yue Feng's view, although in the first half of this year's performance report, the total income of the top ten foreign pharmaceutical enterprises slightly recovered from the same period of last year, under the influence of the recent Chinese government's strict control of drug prices, cancellation of drug addition and other policies, the development path of foreign pharmaceutical enterprises in China is still under great pressure, and the drop in drug prices and market shrinkage have become a common phenomenon In this case, reducing the cost of non core departments through layoffs, focusing on the development of patented drugs with long life cycle and high R & D difficulty have become the same direction of transformation of foreign pharmaceutical enterprises For Bristol Myers Squibb, the large-scale layoffs in China are not only to improve profitability, but also closely related to the tightening compliance policy In the future, multinational pharmaceutical companies will make the same transformation and adjustment It is understood that in 2013, the U.S Securities and Exchange Commission accused Bristol Myers Squibb's joint venture in China of bribing healthcare workers in state-owned hospitals, and Bristol Myers Squibb paid a fine of 14 million US dollars Industry insiders believe that after GlaxoSmithKline's bribery incident, Bristol Myers Squibb has realized that there is a great risk in the Chinese market, which also foreshadows the subsequent job cuts and promotes the transformation of Bristol Myers Squibb in the Chinese market Fellow travelers include GlaxoSmithKline, whose general manager for China, Herve gisserot, confirmed at the end of last year that the company had cut 40% of its sales representatives in China Yuefeng said that in response to the improvement of the level of domestic generic drugs, the Chinese market is also tightening the inspection on the compliance of marketing methods "Many people think that products are the foundation for foreign pharmaceutical companies to win over domestic pharmaceutical companies, but they are not In fact, there are not too many foreign pharmaceutical companies that really occupy the hospital market with leading products Most of them rely on the power of marketing mode to occupy the high-end market The tightening of compliance policy will also cause certain pressure on the product publicity of foreign pharmaceutical enterprises "