Drugmakers like Gilead, Mylan and Novo--not Big Pharma--are job creators

Print 27 July 2015
Eric Palmer / FeircePharma

Gilead's takes top prize for revenue per employee at $3.5M each

With a couple of exceptions, including 12% job growth at AstraZeneca ($AZN), little changed last year when it came to Big Pharma's employment numbers. But drop down to midtier players and the employment picture changes significantly, both in terms of how many jobs were added last year, and in one very notable case, how few.

Allergan CEO Brent Saunders

Bayer added 5,700 employees last year, while Baxter ($BAX) and Mylan ($MYL) added 5,000 each, according to a new report from EPVantage of EvaluatePharma. To a large degree, these jumps reflect the heated pace of M&A last year, like at Actavis--pushed by both chairman Paul Bisaro and then by Brent Saunders, who became CEO after Actavis bought out Forest Labs last year. Actavis, which became Allergan ($AGN) this year as an outgrowth of its acquisition binge, added 2,400 employees in 2014.

But there were some companies among the top 10 midtier drugmakers for which it was about organic growth. Ranking fourth among those in boosting their employment last year was Novo Nordisk ($NVO), which added 3,014 people to reach a total of 41,450. The remaining 5 are all biotechs, Celgene ($CELG), Gilead Sciences ($GILD), Biogen ($BIIB), Regeneron ($REGN) and Alexion ($ALXN), with each tabulating significant organic growth relative to their size.

Gilead, however, while ranking seventh in job creation, may be more distinctive for how few people it hired in 2014 when it was launching its hep C wonder drugs, Sovaldi and Harvoni. It added only 900 employees, in a year in which its revenues skyrocketed 126.5%, to $24.474 billion, from $10.804 billion the year before. The breakout hep C cures delivered more than half of Gilead's revenues, $12.4 billion, and essentially all of the growth. As a result, Gilead CEO John Martin was able to see revenue per employee numbers last year that no other drugmaker came close to touching.

With 7,000 employees and about $24.5 billion in revenue, it works out to $3.5 million per employee. The closest was Celgene, with $1.26 million per employee. The top 5, Gilead, Celgene, Shire ($SHPG), Biogen and Amgen ($AMGN) all recorded more than $1 million per employee last year. That compares with Johnson & Johnson's ($JNJ) $590,000 per employee at tenth on the list.

The only other Big Pharma player among the top 10 in revenue per employee was Pfizer ($PFE), which ranked seventh with $620,000 per employee. With Pfizer, EPVantage points out, it has been a case of revenue per employee going up in large part as employees numbers went down, It has whacked an estimated 51,000 employees in 7 years. The numbers would have looked significantly different if Pfizer had pulled off its $100+ billion buyout of AstraZeneca last year, but it backed off in the face of strong political and public opposition to the deal.

It is not only last year where the midtier players threw up significant hiring numbers. Go back a decade and some of the changes can be remarkable to note. The company that has added the most employees over the last 10 years? Teva Pharmaceutical Industries ($TEVA). The generics powerhouse, more recently has been cutting its staff in the run up to generic competition for its workhorse MS drug Copaxone. But over the 10 years, it added nearly 30,000 of its current 43,000 headcount, 67%, over that period. And if it is able to pull off the $43 billion buyout it is proposing for Mylan, then it will add a boatload of employees again.

Move down the list and it is the masters of M&A, Mylan, Actavis and Valeant ($VRX), who stand out. They have cut jobs after each big buyout, but still the growth has been huge. Looked at from another perspective, Mylan grew from 3,000 to 25,000 employees, Actavis from about 3,850 to 21,600 and Valeant from just 2,290 to 16,800 over that 10-year period, EPVantage reports.

While EPVantage says there were few headcount changes of note last year for Big Pharma, there were some big changes over the decade, both in growth and shrinkage. Swiss drugmaker Novartis ($NVS), for example, has grown its employment 64% in that time period, while Pfizer's fell 32%.

But EPVantage points to three Big Pharma players whose employment pictures took notable turns last year. Merck & Co. ($MRK) saw employee numbers fall 8%, while Bristol-Myers Squibb ($BMY) was off 11%. AstraZeneca however, seems to have gotten over the hump of patent losses of heartburn med Nexium and cholesterol-lowering drug Crestor, losses that resulted in big job cuts for several years. Last year, AstraZeneca added some 6,000 employees, accounting for a 12% job growth, while managing to avoid being bought out by Pfizer. The report also pointed out, that with Bristol-Myers establishing itself as a leader in the immuno-oncology field, it may be poised for a return to growth as well.

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