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[Special] How are Korean employees coping with big-pharma M&As?
  • By Kim Yun-mi
  • Published 2019.10.14 13:45
  • Updated 2019.10.14 13:45
  • comments 0

Since multinational pharmaceutical companies announced merger and acquisition plans last year, Korean offshoots have been actively taking follow-up measures to coordinate with the global works and personnel affairs. However, not every Korean unit has a smooth transition. Some of them are struggling with management-labor disputes.

Takeda Korea-Shire Korea merger hits a snag

After Japan-based Takeda Pharmaceutical announced the completion of the acquisition of Ireland-based Shire in January, Takeda Pharmaceutical Korea began the merger process with Shire Korea. As the first step, Shire Korea CEO Moon Hee-seok was appointed as the new CEO of Takeda Korea.

However, Moon faced a hurdle immediately after his inauguration. The labor union of Takeda Korea claimed that Takeda employees suffered unfair changes in their jobs and roles. In contrast, Shire workers received favorable treatment during the merger of the two companies. Takeda workers also expressed concerns over job security, after rumors circulated that the company might sell diabetes/circulatory business division.

Takeda said, “The final merger of Takeda and Shire within Korea will be completed next year.” The company added that it would review standardizing the employment rules of the two companies later, in line with the integration schedule.

There was no legal issue that employees at the two different companies were working under the two different systems, Takeda Korea said. The conflicts between the labor and the management were only natural that any merger of the two firms would bring, it said.

However, the labor union said the merger of the Korean units of Takeda and Shire was going against the original direction of Takeda’s acquisition of Shire. It was Takeda that bought Shire, but their Korean units are processing the organizational transition as if Shire had acquired Takeda, unionized workers said.

“While about 30 former Takeda employees left the company, no Shire worker did so,” a member of the labor union of Takeda Korea said.

The company, however, refuted the labor union’s claim and called it a “rumor.” The leaving of Takeda workers was due to personal reasons, and most of them aimed at personal career development, the company added.

However, the labor union said it would go on a strike.

The union said on Thursday that 48 out of the total 52 members participated in the vote, and 47 members voted in support of the strike.

The union has been conducting collective bargaining with the management for the past three years, insisting on the establishment of a new job title system for the sales department and reorganization of incentives. The workers are also in wage negotiations that have been absent since the beginning of 2018.

As the collective bargaining broke down, the labor union applied for mediation to the National Labor Relations Commission. As the second trial for mediation failed, the union decided to vote whether to go on a strike.

The union members recently participated in the general meeting of Takeda’s labor unions at the headquarters in Japan. There, they told the head of the Japanese labor union about how Korean workers were unfairly treated during the merger with Shire Korea, they said.

BMS Korea-Celgene Korea merger goes smoothly

BMS said in January that it would acquire Celgene for $74 billion. It was another mega-deal taking place at a similar time with Takeda’s acquisition of Shire. Still, employees at Korean units of BMS and Celgene reacted positively, unlike those at Takeda Korea and Shire Korea.

Workers expected that BMS’ strength in solid cancer and skin cancer with immunotherapies such as Yervoy and Opdivo and Celgene’s expertise in blood cancer would create synergies for anticancer drug development.

However, executives and salespersons at BMS Korea expressed different views on the merger with Celgene Korea. As Celgene specializes in blood cancer treatment and BMS, anticancer drugs, employees do not expect much restructuring in sales positions. However, there will be limited executive positions because the two companies’ sales will aim to sell anticancer drugs anyway.

“Salespersons think that even if Celgene CEO is appointed as new CEO of BMS Korea, it’s not going to be too bad,” a salesperson at BMS Korea said. However, executives at the company are on the alert to see who will be appointed as CEO and how the company’s reorganization will go in November.

AbbVie Korea-Allergan Korea workers on ‘wait-and-see’ stance

AbbVie’s announcement of its plan to acquire Allergan in June shook up the multinational pharmaceutical industry. AbbVie said it would buy Allergan for $63 billion. The size of the deal was smaller than that of the BMS-Celgene merger, but industry watchers paid more attention to the deal because Allergan was an active player in the cosmetic market for a long time.

After the deal announcement, however, Allergan suffered negative issues such as a controversy over the cancer risk of breast implants and the launch of Botox’s rival products in the U.S. In Korea, too, the recipients of Allergan’s breast implants filed a class-action lawsuit against the company. Allergan Korea CEO Kim Ji-hyun was summoned to the National Assembly’s audit as a witness. The issue of risky breast implants has drawn more attention than the company’s M&A with AbbVie here.

Employees and executives at both companies are taking a “wait-and-see” stance over the merger.

“We heard that the two headquarters were merging, and the global M&A will proceed until early next year,” an official at AbbVie Korea said. The Korean unit expects that the merger will be completed next year or the following year, and some Allergan’s executives moved to AbbVie, the official went on to say.

“After Allergan’s breast implant issue occurred, however, it became possible that the situation could change. We will see what happens,” he said.

Executives at AbbVie Korea said they felt frustrated because they had no information about the merger with Allergan.


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