TRENTON, N.J. — Drugmakers — beset by growing generic competition, few new blockbusters, drug safety concerns and pressure from insurers and government health programs to discount prices — are cutting tens of thousands of jobs.
Nearly all of the country's 10 largest pharmaceutical companies in the U.S. are restructuring, with some, such as Schering-Plough Corp., announcing plans to trim 10 percent or more of the work force.
Since 2007, eight of the world's biggest drugmakers have eliminated more than 42,000 jobs; two other major companies have eliminated another 12,200 jobs in the last few years.
"There are a lot of things going on making this the perfect storm for the industry," said Argus Research health care analyst Martha Freitag. "My sense is maybe we're halfway through" the cost cutting.
Today's struggles come after the industry's golden era in the 1990s, when a slew of new drugs quickly became blockbusters, fueling almost routine double-digit quarterly profit increases and rising stock prices and dividends.
"They're being hurt by their own past enormous success," Freitag said.
The blockbusters of the 1990s have nearly all been replaced with generics, and pharmaceutical companies are finding it harder to come up with new drugs — 53 were approved in 1997, but only 16 last year.
More recently, generic drug companies have been increasingly filing — and winning — legal patent challenges, bringing generic competitors to market years before they were expected and cutting into drugmaker profits that much earlier. For some big pharmaceutical companies, that's meant billions in sales suddenly evaporating overnight, rather than over months, as prescription plans quickly switch patients to generics.
Analysts predict that 2011 and 2012 will be particularly rough. Brand-name drugs totaling $40-billion in sales — including the world's top-selling medicine, Pfizer Inc.'s cholesterol-fighter Lipitor — lose patent protection then. Some drugmakers already are restructuring in anticipation of that.
Meanwhile, federal regulators have increased scrutiny — and rejection — of experimental drugs, and have restricted the use of some existing ones due to safety problems. Safety concerns also have forced some drugs off the market or scared away patients.