U.S. pharma stocks plunge as health insurer cuts jobs
The U.K. and Canada’s biggest health insurers have announced cuts in workforce in response to the coronavirus pandemic, with the United States the biggest casualty.
The closures were announced Friday, with Anthem Inc. and Cigna Inc. announcing a 1.6 million and 1.2 million layoffs, respectively, in their fourth and fifth quarters.
Anthem and CIGNA said their full-year 2016 revenues were down about 9% from the previous year.
That’s due to the sharp rise in the number of deaths and the spike in hospitalizations.
“While we have made progress in our efforts to reduce COVID-19 burden and to provide additional support to our communities, we continue to face significant challenges in addressing the complex issues of COVID,” Anthem and the two health insurers said in a joint statement.
Cignab said its full-time and part-time employees are going through layoffs, but will remain in the business.
Anthem has about 1.3 million employees worldwide, according to a statement.
“The company is investing $1.6 billion over the next three years to reduce the burden of COVI-19 and the impact it has had on our communities,” Cignas CEO Mark Bittman said in the statement.
It said it will hire more than 1,100 people, cut more than 10,000 jobs and spend more than $1 billion to help patients.
CVS Health announced its second-quarter results Friday, and said it’s also reducing its workforce by 3,300 positions, cutting about 1,500 positions and adding 200 new positions.
It also announced it is expanding the number and types of health care services it offers.
Citi Group Inc. said Friday that it’s cutting about 2,500 jobs.
“This action is a reflection of our commitment to provide timely and accessible care to our patients, and we will continue to invest in improving patient care and delivering greater value to our customers,” Citi said in an emailed statement.
The companies said the cuts are part of a broader effort to make healthcare more cost-effective.
“We are focused on providing greater value for our customers and our patients’ providers, and this is part of that,” said Mark Bitterman, Citi’s CEO, in the company’s statement.
A few of the biggest names in the health insurance industry, including UnitedHealth Group Inc., Blue Cross Blue Shield of North America Inc. , and Health Net Inc., also announced cuts.
UnitedHealth said Friday it was cutting roughly 11,500 full- and part time positions and cutting more than 2,300 full- time positions.
The company said it is investing more than 30 million dollars in health care infrastructure, which includes new data centers, telemedicine services, and new outpatient services.
“As we’ve been focused on reducing COVID infection rates and the need for our patients to stay in the hospital, we’ve focused on investing in our hospitals to support our ability to continue to offer value to patients,” said Chris L. Bocken, chief executive of UnitedHealth, in a statement Friday.
United Health said it has also made significant investments in its network of emergency departments, health systems, and community health centers.
Health Net said it was reducing about 2.3 percent in its full time and part timers by eliminating about 10 positions.
All three companies said they will be adding additional positions, including about 2 more in their second and third quarters, as well as some smaller roles.
United States pharmaceutical companies are facing the biggest blow from the pandemic.
They have had to make decisions about where to open their doors and which to shut down.
Bayer AG said Friday the company would eliminate about 1 percent of its staff, which is about 200 people, in North America.
U.s. medical device companies are scrambling to make up for lost business.
Medtronic Inc. announced Friday it would eliminate more than 600 positions in the United Kingdom and Canada.
The American company said its annual revenue in the U.k. and the United.
S., where the coronovirus has killed more than 18,000 people, will be down 9% to $4.3 billion from $4 billion.
The reductions come as drug makers have been laying off workers in the face of the coronivirus outbreak.
Bayer has been laying people off since November, and its shares dropped 7.5% in after-hours trading Friday.
Medco, the British company, said its chief executive officer, James White, would step down in June.
Medtech Inc. has had to slash more than 300 positions, and it has been cutting about 5,000 in its U. k. and U. s. divisions.
“These decisions will affect our business and the lives of our employees, our shareholders and our customers in the long term,” said Medtech CEO John Kiley in a release.