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[News Focus] Pfizer Korea's restructuring enters into last-minute tug-of-war with union
  • By Lee Han-soo
  • Published 2020.06.23 16:51
  • Updated 2020.06.24 10:47
  • comments 0

The unionized workers of Upjohn Korea, a spinoff of Pfizer Korea's established product business entity, recently demanded the latter to provide financial compensation for their transfers from the large well-known company to a new, lesser-known firm.

In January last year, Pfizer announced that it would reorganize the company into three units – biopharmaceuticals, Upjohn that focuses on off-patent drugs, and consumer healthcare. Pfizer split off Upjohn and merged it with Mylan in July. The new entity became an independent corporation, Viatris, the world's largest generics-specializing company.

Under the headquarters' reorganization policy, Pfizer Korea started the spinoff process in May 2019 for completion around late-2020 and will begin anew as Viatris.

The labor union claimed that Upjohn employees have suffered from a sense of anxiety over the past year, losing trust and loyalty toward the company for many reasons. For example, aside from the loss of confidence in the company, employees also experienced substantive financial losses, including the rise of interest rates of their bank borrowing, because of downgraded credit standing by belonging to a new company.

"Until now, the employees of Upjohn have worked with the pride of belonging to the world-famous company. Under the company's strategy of maximizing the profits of shareholders, however, our affiliations were forced to change overnight," it said. "We have struggled for the growth of Pfizer Korea, and we believe that the company should have prioritized rewarding employees transferred to Upjohn Korea for their damages, both mental and financial."

As part of the compensation, the labor union demanded that Pfizer Korea reward the employees for their significant contributions to the company’s growth of employees. It also called for Mylan, Pfizer’s merger partner, to provide unionized workers with a "merger encouragement payment" to restore the trust in the new management and ensure the successful launch of Viatris.

As to whether the union plans to take further action if the negotiation does not progress smoothly, one of its members said that they are planning to see the negotiation through before coming up with additional plans.

In response to the union's claims, Pfizer Korea said, "Currently, the company is discussing various issues with the union about the worldwide Upjohn-Mylan merger for the successful launch of the new company and integration of its new members."

No specific decision has been made yet, the company added.

According to an industry expert, some form of financial benefits may be possible while there have been no spinoff compensation cases in Korea.

"The company will seldom give the employees spinoff compensation because it could mean the management will have officially recognized that the newborn company has a lower value," a labor attorney told Korea Biomedical Review on Monday, asking to remain anonymous citing legal reasons. "Therefore, Pfizer will hardly accept the union's reasons why it needs compensation."

However, the union may receive some consolation payment, provided it promises not to take the case to court in the future.

"While there have been no precedents where a court sided with a union regarding spinoff compensation, there is a possibility this becomes the first case of the court’s ruling in favor of such a payment," the attorney said. "Therefore, the company may offer some form of financial rewards to avoid legal battles."

Many industry officials are watching with interest how the labor-management tug-of-war in the final stage of Pfizer’s scheduled restructuring will end.

corea022@docdocdoc.co.kr

<© Korea Biomedical Review, All rights reserved.>

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