With pharmaceuticals giant AstraZeneca announcing it is axing 7,300 jobs globally, Channel 4 News asks if we are are witnessing the demise of the "big pharma" age.
AstraZeneca is axing 7,300 jobs in a fresh blow to the pharmaceuticals industry. The UK's second biggest drugs maker employs 61,000 people globally. It is not yet clear how many of its 8,000 British positions will be cut.
The news came as the company announced a 2 per cent fall in revenue to £21.1bn, and a 4 per cent drop in profits to £8.4bn. It has warned that revenues for 2012 are likely to be down by 10 per cent.
The job cuts are part of new restructuring initiatives "designed to improve productivity and strengthen the company's commercial, operations and research and development capabilities", the company said.
In recent years, the pharmaceuticals industry has come under a great deal of pressure as patents expire on existing best-selling drugs, leaving them open to cheap competition from generic brands. AstraZeneca's anti-psychotic drug Seroquel, for example, will lose exclusivity in the United States and many European countries this year.
On top of this, the Anglo-Swiss company has suffered a number of setbacks in its efforts to secure approval for new so-called blockbuster drugs that would be prescribed to many millions of patients. It had developed an ovarian cancer drug called Olaparib, but it was held back after tests showed it was unlikely to be effective.
One year on
The latest round of job cuts in the industry comes precisely a year and a day since drugs giant Pfizer announced the closure of its site in Sandwich, Kent, with the loss of 2,400 jobs.
The challenges faced by large pharmaceuticals companies are a particular worry in the UK, which is a world leader in the field. Here, around 67,000 people are employed within the industry, a third of whom specialise in research and development.
We need to find a viable way to continue to make breakthroughs. Allan Black, GMB national officer for pharmaceuticals
On Thursday, Allan Black, GMB national officer for pharmaceuticals, said: "These cutting-edge research and development jobs are both well-paid and essential for a thriving UK economy.
"As a nation we do need to find a viable way to continue to make breakthroughs in bringing to safe use much-needed new medicines."
Competition from abroad is also posing a huge challenge to the UK sector. It is much cheaper to conduct clinical trials in China, for example, which is forecast to be the largest pharmaceuticals marketplace in the world within 10 years.
Plus, there are new growth opportunities in other developing economies like Brazil, Russia and India. Experts say all of these places have very effective training programmes in place for scientists, so there are huge opportunities to develop new drugs outside the the US, Europe and Japan.
With so many recent job cuts and rising competition within the developing world, are we witnessing the demise of "big pharma" in the UK?
Gary Paragpuri, Editor of C+D Magazine, told Channel 4 News: "The main problem is trying to find new blockbuster drugs, as the major ones have already been discovered. On top of that, big brands are coming to the end of their patent life.
"It's quite a big issue for the sector. How do you recover that lost income from that big brand if there are no new drugs out there to be discovered?"
The blockbuster approach has come to a natural end. Professor Joyce Tait
Nevertheless, it appears all is not lost. Rather than big pharmaceuticals companies suffering an inevitable demise, it appears they are merely changing the way they operate. Gary Paragpuri explained: "It's all about sharing expertise and sharing the risk. Big pharmaceuticals are now working with lots of small specialist niche companies who each work on a handful of products."
In the last decade, not only has there been this change in approach, but there has also been a clear shift in the types of drugs big companies are researching. Scientific adviser for the Innogen Centre, Professor Joyce Tait, told Channel 4 News: "The blockbuster approach has come to a natural end. But now, there are plenty of opportunities for big pharmaceuticals to be innovative. They can now look at DNA and genetics to tailor drugs to individual groups within society."
However, research conducted by Innogen, funded by the Economic and Social Research Council, shows regulation of the drugs industry needs to change if the sector is to be productive and profitable, both globally and in the UK. Prof Tait told Channel 4 News firms are finding it difficult to be innovative because of the current regulatory process.
"It makes the trial process for new drugs very expensive. It takes about 15 years and it costs about £1bn to get a drug onto the market. We need to come up with smarter cheaper ways of regulating the industry", she said.
Big pharmaceuticals will continue to play a vital role in the industry, as long as they continue to work with smaller firms and adapt their research to the changing times. Gary Paragpuri said: "More and more we're seeing the focus shift to preventing people from getting ill, rather than cure. I think drugs companies are going to have to come up with 'packages of care' to prevent illness. Then, there will be even further opportunity for collaboration within the industry."