Being the largest company by any number of measures--revenues, earnings, those kinds of yardsticks--is a good thing. Being the largest by number of employees is trickier, unless yours is also the largest by those other measures. As we have seen time and again in recent years in the pharma industry, having lots of employees and falling revenues is a formula that leads to layoffs.
As a whole, the top 10 companies had fewer employees at the end of 2012 than at the end of 2011. The contraction was not as large as you might expect given the effects of patent losses for such huge blockbusters as Pfizer's ($PFE) Lipitor, which went off near the end of 2011, or Merck's ($MRK) Singulair. Total employment at reporting time was 921,375 last year, only 5,500 employees fewer than the year before. That is only an 0. 6% reduction.
Five companies ended the year with fewer employees: Sanofi ($SNY), Pfizer, Merck, Bayer Healthcare and AstraZeneca ($AZN). Four actually grew employment: Novartis ($NVS), Johnson & Johnson ($JNJ), GlaxoSmithKline ($GSK) and Roche ($RHHBY). One, Abbott Laboratories ($ABT), was unchanged. The list covers a large range in numbers with the top company having nearly 2.5 times the number of employees of the smallest on the list, a total of 76,000 more.
A company's spot on this kind of list can change suddenly, however, because M&A action can dramatically alter the employment picture at a company. Take Johnson & Johnson, which hit the list at number 2. It added more employees than any other company in the top 10 by a long shot, but that was in large part due to its acquisition of devicemaker Synthes, which came with about 7,000 employees. Johnson & Johnson was also among only four companies in the top 10 to grow revenues last year. However, if you figure its revenues per employee, which we did, you find it fell into the middle of the rankings.
Then there is Abbott. As I said, it reported absolutely no change from year-end 2011 to year-end 2012. Then on Jan. 1 of this year, the employment picture changed entirely. That is when it gave up 21,000 employees to its spinoff AbbVie ($ABBV). As these things go, AbbVie is already trimming that number in the face of generic competition for some of its cardiovascular drugs.
Like I said, it is tricky to measure, but it's always interesting to see who is growing and who is shrinking and why. So what follows is the ins and outs of the top 10 and their employment numbers. As always, we welcome your insights and your feedback.
-- Eric Palmer (email | Twitter)