European Staff Fight Back As Drugmakers Hack Costs

Job Cuts Could Lead to Strikes

Europe's pharmaceuticals industry, not known for industrial disputes, is experiencing a spate of clashes as employees fight back against cuts in jobs and benefits.

Britain's second-biggest drugmaker, AstraZeneca, faces the threat of the first strike since its formation in 1999, after workers at one of its main manufacturing facilities voted to take action in a dispute over pensions.

In France, Sanofi-Aventis is in a dispute with workers over plans to cut around 900 jobs at plants making ingredients for some of its top medicines and U.S.-based Merck & Co faces a court hearing over restructuring its Dutch operations.

"This rash of disputes is very unusual for this industry," said Mike Ward, a veteran drugs sector watcher at brokerage Ambrian Partners. "But it's a sign of the times."

Expiring patents on blockbuster drugs are threatening future revenues, prompting the tougher attitude to labor costs by management teams. A wave of consolidation among some companies, including Merck, has added to the cost-cutting drive.

Overall employment in the European pharmaceutical industry has already fallen from 636,000 in 2005 to 630,000 in 2009, according to the European Federation of Pharmaceutical Industries and Associations. With further cuts in the pipeline, that number is likely to fall a lot more by 2014.

Money Tight
Allan Black, national officer at the GMB union, representing staff at AstraZeneca's Macclesfield site, said companies were still making good profits but attitudes were hardening.

"In the past, if the industry has been confronted with an industrial problem, bluntly, they've tended to throw money at it. That is no longer the case," he told Reuters.

Black expects his union members to take short-term strike action at AstraZeneca's site in the north of England next month, unless the company reconsiders its plan to freeze the final salary pension scheme.

AstraZeneca said it was reviewing the union's strike ballot, which it said resulted in about a third of GMB members, and less than 2% of its British employees, voting in favor.

At Sanofi, where new Chief Executive Chris Viehbacher is rationalizing operations, a court last week ordered the resumption of consultations on plans to reorganize the chemical and biotechnology division.

Sanofi is aiming for staff cuts at its Neuville-sur-Saone and Romainville plants by 2014.

"The pharma industry has the strategy of externalizing R&D and revising productivity so they can cut costs and that is unacceptable given the profits these companies make," said CGT trade union spokesman Thierry Bodin.

"We see executives pocket high salaries while employees suffer the consequences."

In the Netherlands, Merck is facing a Sept.

2 court hearing over the restructuring of its Dutch operations, including its plan to close the R&D sites and lay off 2,175 of a total 4,500 workers by end-2012.

The Dutch works council, which represents employee interests, argues it has not been properly consulted.

"We hope the judge will say that that decision cannot be made and that Merck has to reconsider the decision," said Iris van Dinther, works council member at Organon BioSciences.

Asked about possible strike action, Van Dinther said no decision had been made prior to the court ruling, but workers were ready to take action.

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