Big drugmakers, under pressure, will shed jobs

October 20, 1993|By New York Times News Service

Amid growing pressure to restrain health-care costs, three large drugmakers announced plans yesterday to cut 7,000 employees over the next three years, adding to tens of thousands of pharmaceutical-industry jobs eliminated in recent months.

The three companies, Pfizer Inc., American Cyanamid Co. and Upjohn Co., declined to say how the cuts would be distributed until they told the workers affected.

New York-based Pfizer said it was eliminating 3,000 jobs to prepare for changes, which, it said, had transformed drug manufacturing into "a very fragile industry." The company said it had already eliminated 1,000 jobs in previously unannounced reductions after it sold or spun off 14 businesses.

"There will just be fewer of us here," said Henry McKinnell, a Pfizer executive vice president.

He added that the new cuts would be spread over 40,000 workers in 70 nations and would include early retirements and dismissals.

Pfizer said it would report a $525 million after-tax charge against earnings in the third quarter for consolidating manufacturing, distribution and administrative functions. With the charge, it said it lost $214 million, or 65 cents a share, in the quarter.

American Cyanamid, based in Wayne, N.J., said it would cut 2,500 jobs -- about 9 percent of its workers -- over three years, mostly from its medical divisions. The company said it would take a restructuring charge of $150 million to $200 million in the three months ending Dec. 31.

Upjohn, based in Kalamazoo, Mich., said it would eliminate 1,500 jobs through early retirements by December 1994 and close or reduce the size of 14 of 31 factories.

Its move would result in a $183 million charge after taxes in the third quarter, leading to a loss of $30 million, or 19 cents a share.

Upjohn has cut its work force 17 percent, to 17,500, since early 1989 in preparation for the expiration yesterday of patents on two drugs -- Xanax, used essentially to treat anxiety, and Halcion, essentially for insomnia.

Trading in the three companies on the New York Stock Exchange was somewhat greater than usual yesterday. Upjohn gained 37.5 cents to close at $32 a share. Pfizer lost 75 cents a share, closing at $63. American Cyanamid closed at $57.50, down 37.5 cents.

Job reductions have spread through the industry, as buyers of managed health care use their growing strength to enforce price limits, cutting sharply into drug profits.

The actions by the drug companies yesterday followed job reductions announced over the past 12 months by other major drugmakers.

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