Thursday, February 2, 2017

John Carroll takes it to pharma CEOs

I really enjoyed this Endpoints post about all these pharma CEOs going to the White House and telling the President that they will be hiring people. He then lays out their actual records from the past few years: 
“We’re looking at ways to expand,” Joe Jimenez, CEO of Novartis, told Trump. “One of the things that can help us is a lower tax rate.” 
Novartis is well known as a global player that doesn’t leave a stone unturned when it comes to finding new efficiencies. That cost-cutting spirit drove an R&D overhaul last year, and new programs aimed at doing everything the Swiss company can do to hold the line on costs. That approach has had a big impact on employment. 
Novartis counts FTEs. At the end of 2016 they employed 118,393, 23,037 in the US and 55,205 in Europe. Five years earlier, the score was 123,686 total and 27,242 in the US. The cuts were clearly aimed at its US staff....
Read the whole thing - you'll either laugh or cry or perhaps you'll do both.

(In all seriousness, there is something a little strange about President Trump asking pharma folks to bring manufacturing jobs to the United States, i.e. API plants don't seem to me to be all that labor-intensive. (That said, those jobs tend to have a pretty decent median wage.) Who knows?) 

7 comments:

  1. I wouldn't assume that politicians in general know much about pharma. I haven't heard much from Trump that suggests he understands how research/pharma works (e.g. deregulating our way to a cancer cure). I'd guess that when political types hear "pharma manufacturing" they think of somebody blue-collar welding pills into packets. Any kind of "manufacturing" brought back to the States is good, right?

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  2. Whoa, hypocrisy from a Pharma CEO.....shocking......

    Unsure which is worse, CEO of AGN bragging they won't increase prices much and then raising them 9.9% (versus maybe 2% CPI) or CEO of AGN all indignant about Americans paying too much for drugs while domiciling in Ireland to avoid paying AGN's fair share of US taxes.

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  3. Pharma isn't labor-intensive. Neither is the chemical industry. Or semiconductors. Or metals production. Or modern Western-style manufacturing in general.

    However, wages paid out by those industries eventually get spent, so you don't need to work for them to benefit from them. Sorry if I'm pointing out the obvious, but people who downplay the importance of manufacturing often don't seem to grasp that.

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    1. There was a pretty good article in the Economist recently explaining how manufacturing has gotten much more fragmented and specialized than before, and the final assembly step doesn't add much value. "Made in China" often means that just the final assembly was done in China, with high-value components made elsewhere (and often by specialized companies). Additionally, that cafeteria lady who's now an employee of an outside contractor would have counted as a plant employee in the old days.

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    2. Anon3:07, if you think I downplay the importance of manufacturing on this blog, I have clearly failed in communication somewhere here.

      The point isn't "we shouldn't have manufacturing in the United States because it's not very labor-intensive", it's "I think the President has a odd sense where the bulk of actual manufacturing employment is, if he's asking pharma folks for more manufacturing." At its peak, the number of jobs in the pharma manufacturing sector was ~300k people. You could make an argument that we've missed 50k-100k positions in the move offshore, maybe.

      I suspect that your point is "every manufacturing job matters"? which in that case, yes, I tend to agree.

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    3. Yes, that was sort of my point. There's actually a term, "employment multiplier," that describes specifically what I was trying to say. Jobs create other jobs and manufacturing tends to generate the most...

      https://www.nrc.gov/docs/ML1224/ML12243A398.pdf

      In breezy articles about automation (I'm looking at you, Wired), this is often overlooked, and the reader is left with the impression that manufacturing jobs are too few to matter...which was the vibe I was getting from your comments about the labor-intensity of pharma jobs. Sorry if I misinterpreted what you were saying.

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    4. No, no worries. I think my point is much smaller/different, which is "if the President wants to harangue pharma CEOs about jobs, he should start with R&D (which is wildly labor-intensive) and not necessarily manufacturing. If he specifically wants manufacturing positions, he should look at another industry group (and maybe that's why he beats up on car companies.)" You can move an API plant from Shanghai back to New Jersey, and you won't really have gained that many FTEs, I feel, although maybe my understanding of the labor intensity of pharma manufacturing facilities is incorrect.

      I take your point, re: employment multiplier.

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