Dragging down S&P Q1 profits! American pharmaceutical giant streamlines product lines and lays off 2,200 employees worldwide by the end of next year

The S&P 500 companies reported impressive first-quarter financial results this year. According to 92% of the companies\’ performance figures, the index\’s profits are expected to increase by 5.4% year-on-year. However, FactSet analyst John Butters pointed out that without the U.S. pharmaceutical company BMS ) (BMY-US) and other three companies, the annual growth rate will reach 9.7%. BMS\’s first-quarter revenue grew 5 to 6 percent, but international revenue was flat at about $3.4 billion, mainly due to lower average net selling prices.

S&P 500 companies reported outstanding first-quarter financial results this year. According to 92% of companies\’ performance figures, the index\’s profits are expected to increase by 5.4% year-on-year. However, FactSet analyst John Butters pointed out that without U.S. pharmaceutical companies, Toxo Bristol-Myers Squibb (BMS) (BMY- US) and other three companies will drag the annual growth rate to 9.7%.
BMS revenue grew 5 to 6% in the first quarter of this year but international revenue was flat at about $3.4 billion mainly due to lower average net selling prices.
In addition to announcing layoffs to cut costs, BMS has also streamlined its product lines. BMS plans to cut costs by US$1.5 billion through large-scale restructuring by the end of next year. It will lay off 2,200 people globally, accounting for 6% of the total number of employees. BMS closed its cancer immunology and cell therapy office in California last month. Thematic Research Center has suspended 12 projects and will continue to review its own product lines during the remainder of this year.
According to China\’s \”21st Century Business Herald\”, even the employees of the drug team that took over the rights to the hypertrophic cardiomyopathy drug mavacamten in Greater China at the end of last year have been laid off.
Hou Xuchao, founding partner of CIC, said that the main reasons for large-scale layoffs and streamlining of product lines by multinational pharmaceutical companies include a response to the current market environment, as well as considerations of different factors such as cost control, strategic adjustments and improving R&D efficiency.
Financing in the global medical and health industry has cooled down in recent years and has fallen back to 2019 levels. Last year, 3,076 primary market investments in the medical and health field were completed globally, with a cumulative financing of US$57.4 billion, a shrinkage of more than 20% compared to 2022. The average size of a single financing has also dropped from the 2021 high of US$35 million. By 2023, it will be nearly halved to US$19 million.
BMS is not the only multinational pharmaceutical company to make major layoffs.
Layoffs at multinational pharmaceutical companies have continued this year.
According to Fierce Biotech data, as of last Saturday (11th), a total of 77 biotech companies have laid off employees globally this year, including large multinational pharmaceutical companies such as Novartis, Roche, Pfizer and Bayer.
It is worth noting that this wave of layoffs has also affected middle and senior managers and core R&D personnel.
Analysts in the pharmaceutical industry said that the recent news of layoffs from major pharmaceutical companies shows that multinational pharmaceutical companies are going through a new round of transformation pains. In order to cope with more challenges, corresponding business adjustments have become more frequent, and layoffs have become the norm.
Hou Xuchao believes that multinational pharmaceutical companies can reduce costs and improve operational efficiency through measures such as layoffs and streamlining product lines in the short term. In the long term, they still need to rely on the research and development and marketing of innovative drugs to achieve sustained and stable performance growth.
For corporate planners, the current \”golden age\” of multinational pharmaceutical companies is gradually far away. Under the current market conditions, companies must consider improving operational efficiency and reducing labor costs, while also considering selling non-core products.
In order to better respond to market challenges, in addition to large-scale layoffs, multinational pharmaceutical companies have also taken measures such as streamlining product lines, restructuring and mergers and acquisitions.
It is worth noting that many of the projects that were axed by multinational pharmaceutical companies were in early clinical stages, but there were also products in phase III clinical trials that were eliminated.
Industry analysts say that if the project advances to the clinical stage and sufficient data is presented, the success rate of late-stage development will be satisfactory. However, if the data in all aspects are not ideal, the future drug prospects will be confused and it is a sensible way to stop losses in time.
Generally speaking, multinational pharmaceutical companies tend to focus their research and development on products with higher return rates and more market acceptance.
In addition, in order to ensure cash flow, intensive layoffs, project cuts, and clinical suspensions have become the norm. However, in order to achieve sustainable development, finding new growth areas has also become a practical problem faced by various pharmaceutical companies. External licensing, mergers, acquisitions, and restructuring have become multinational pharmaceutical companies. Important measures to \”self-rescue\” include BMS spending US$14 billion to acquire Karuna Therapeutics in the past six months. Its new drug to treat schizophrenia will be approved by the U.S. Food and Drug Administration (FDA) in September this year. Novartis also announced at the beginning of this year that it has reached an agreement to acquire Serono. agreement.

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