Long-Term Pharma Employment: Better Than You Think

There has probably never been as inauspicious a time to produce a multi-year projection of US employment as December 2009, when the overall economic conditions, the political scene in Washington, and populist unrest have combined to make the high unemployment rate the No. 1 topic of news headlines and economic planning. Yet, as it has for many years, that’s when the Bureau of Labor Statistics came out with its biennial Occupational Outlook Handbook, which assembles a variety of BLS studies to project demographic, economic and occupational trends for the coming decade.

At the same time, the drumbeat of layoffs among major pharma companies over the past 12 months has been steady. Most recently, AstraZeneca, having shed 12,600 positions during 2007-2009, expects to cut a further 10,400 between 2010 and 2013. Over time, the Pfizer-Wyeth merger is expected to cost 19,000 jobs, and the Merck-Schering Plough combination 16,000 (both of these figures pertain to worldwide employment). Challenger, Grey & Christmas, the Chicago-based employer-outplacement firm, toted up 61,100 jobs lost in pharma in 2009. Pharma workers are further traumatized by reports that companies are shipping their manufacturing offshore, R&D budgets are being slashed, and tens of thousands employed as sales reps are being axed.

The BLS projection paints a different picture. Over the next 10 years, the US pharma industry is projected to go from its current 289,000 employees to 307,000—and increase of 6.1% (Fig. 1). That’s hardly pacesetting growth; it is below what is projected for the entire US economy, which is expected to grow by 10.1% over the period, to 152 million workers. But it is at the higher end among manufacturing sectors of the economy, which collectively are projected to fall by 9.0%, to 12.225 million in 2018.

The BLS projection methodology is not, unfortunately, rock-solid. The industry analysis itself shows some disconnects—for instance, according to BLS, there is a total of 6,900 “sales and related occupations” in pharma—that number is off by about a factor of ten. The data shown in Fig. 1 pertain to one sector of the pharma industry—NAICS Code 3254, “Pharmaceutical and Medicine Manufacturing,” which does not include such categories as “Biotechnology R&D laboratories or services in the medical sciences” (NAICS 541711), or “Medical and Diagnostic Laboratories” (NAICS 62151).

BLS literature explains that the projections are based on an econometric model of the entire US economy, within which an input-output model is created that links each component of economic activity in one sector to that of another. Basic assumptions about where the US economy as a whole is headed drive much of the activity of these components. The modeling is problematic at a granular level, but has been pretty reliable for charting the overall direction of the economy.

So, the line items in Fig. 1 might be dubious, but it is intriguing that one of the notable declines among the various occupations is that of “top executives,” which is supposed to decline by 6.6%. Take that, head honchos!

Perhaps the best lesson to draw from the BLS projection is as a near-term indicator over the next several years. Overall, although layoffs will continue among big pharma mergers, the industry as a whole will be fairly stable. Relatively higher growth will be seen in R&D-related occupations and production (including, strangely, “mixing and blending machine setters”) and customer service. Declines will be seen among sales personnel, transportation-related occupations. PC