ERP wave hits major multinational pharmas in Korea

BMS, Takeda and MSD launch early retirement programs…Novartis also expected to restructure

Local operations set to restructure to align with evolving global innovative drug portfolios

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Major multinational pharmaceutical companies in Korea are carrying out a series of organizational restructuring initiatives to realign their local operations.

The voluntary early retirement programs (ERPs) launched by Bristol Myers Squibb (BMS), Takeda, and MSD reflect how strategic shifts in the innovative drug portfolios of their global headquarters are influencing the structure of their Korean affiliates.

According to industry sources on July 15, BMS Korea recently launched an ERP targeting commercial employees with 10 years or more of tenure. Eligible employees include those in sales, marketing, wholesale management, business development (BD), and other commercial functions.

The compensation package is reportedly based on "2N+8 (years of service x 2 + 8 months of salary)', with additional individual severance pay added.

BMS Korea said the organizational changes are part of its broader global portfolio strategy.

A BMS official said, "We have continuously evolved our portfolio through strategic prioritization and resource allocation to deliver innovative therapies to patients with serious diseases more quickly. This organizational change also reflects a comprehensive assessment of our Korean portfolio, patient needs, and market environment, and represents a strategic decision to establish a more agile and sustainable operating model."

In recent years, BMS has expanded its pipeline in neuroscience, radiopharmaceuticals (RPTs), and oncology through acquisitions of Karuna Therapeutics, RayzeBio, Mirati Therapeutics, and SystImmune. At the same time, the company has been pursuing cost-efficiency measures to prepare for patent expirations of its major products such as ‘Eliquis (apixaban)’ and ‘Revlimid (lenalidomide).’

Although the company has launched several innovative products in Korea, including Zeposia (ozanimod), Sotyktu (deucravacitinib), and Camzyos (mavacamten), none has yet matched the commercial impact of its flagship immuno-oncology therapy ‘Opdivo (nivolumab).’ As a result, the company's commercial organization is also being restructured to reflect its evolving product portfolio.

Takeda Korea has likewise recently launched an ERP. The program targets employees designated by the company, with compensation reportedly following the same 2N+8 formula plus additional severance payments. For employees with 15 years of tenure, the total severance package is reportedly around KRW 150 million.

The company has been streamlining its organization and improving cost efficiency under the direction of its Japanese headquarters. The company had also recently appointed a new head for its Korean affiliate. Industry observers believe the company's Korean operations are being adjusted in line with its global business restructuring strategy.

MSD and Novartis also conduct ERP…reorganizes around future growth areas

MSD Korea completed its ERP program for its Human Health division last week. The Human Health organization consists of prescription medicines, vaccines, commercial operations, and external affairs functions.

The company emphasized that the ERP was not driven by the performance or patent expiration of individual products, but rather formed part of a broader organizational restructuring to support future product launches and business expansion.

An MSD Korea representative said, “While continuing our growth in oncology, we are preparing to expand our portfolio into cardiovascular and metabolic diseases, infectious diseases, immunology, and ophthalmology. The ERP was implemented as part of our transition toward a more agile and innovative organization capable of supporting launches across these therapeutic areas."

The representative added, "The ERP is designed to support employees who voluntarily choose to pursue new career opportunities. Ultimately, we seek to strengthen the organization's execution capabilities and operational efficiency to support future growth and long-term sustainability."

“We will continue delivering new treatment and prevention options through science-driven innovation while keeping the health of Korean patients as our highest priority.”

Meanwhile, Novartis Korea is also reportedly undergoing organizational restructuring. Industry sources believe the changes are somewhat related to the recent downsizing of its cardiovascular (CV) business unit.

Novartis has steadily adjusted its domestic business portfolio in recent years, including discontinuing its respiratory business in 2022 and transferring its ophthalmology business to Santen Pharmaceutical last year. The latest organizational changes are likewise viewed as part of the company's broader strategy to focus resources on higher-growth therapeutic areas.

Recent ERP programs among multinational pharmaceutical companies are increasingly aimed at reorganizing local operations to align with changes in their global innovative drug portfolios, rather than simply reducing costs. While streamlining off-patent product businesses, companies are reallocating resources toward growth areas such as oncology, immunology, cardiovascular and metabolic diseases, and radiopharmaceuticals (RPTs), with corresponding adjustments to their Korean organizations.

For example, Pfizer previously undertook a similar global restructuring following declining sales of its COVID-19 vaccine and antiviral treatment. Such organizational restructuring among Korean affiliates is expected to continue as multinational pharmaceutical companies continue shifting toward innovation-driven portfolios.

A multinational pharmaceutical company official said, "In the past, ERP programs were largely aimed at reducing costs or responding to weak business performance. Today, they are increasingly focused on reorganizing companies around their future business strategies and innovative drug portfolios. We're seeing more cases where strategic changes at global headquarters are directly reflected in the organizational structure of Korean affiliates."