A lack of significant new drugs and products, declining sales of lucrative flagship franchises and fierce competition have set off a wave of restructuring moves among the biggest names in health care.

In many cases, restructuring is a euphemism for eliminating thousands of jobs, and it remains to be seen whether these moves are quick fixes to prop up dwindling profits, or a recognition of the industry's harsh new reality.

In recent weeks, heart device maker Boston Scientific Corp announced 2,300 job cuts; the smaller King Pharmaceuticals Inc said it would cut 520 jobs, or 20 percent of its work force; Swiss drugmaker Novartis AG, is axing 240 headquarters positions and more than 500 from its U.S. sales force; and Europe's biggest drugmaker, GlaxoSmithKline, said it, too, would cut jobs.

The world's largest drugmaker, Pfizer Inc, and the No. 1 biotechnology company, Amgen Inc, are in the process of major restructuring, including dramatic workforce reductions.

Previously, AstraZeneca said last July it would eliminate 7,600 jobs, and Boston Scientific rival Medtronic Inc last month announced some 500 job cuts from its cardiac rhythm management business.

Robert Hazlett, a pharmaceutical industry analyst for BMO Capital Markets found the trend encouraging -- a difficult realization that these companies had become too fat.

Everyone has taken their lumps across the board, Hazlett said. These companies are not right-sized for the productivity that they're seeing from their labs.

They're paring back and, as new opportunities unfold, the companies will be in much better position to capture better economics, he said.

BELT-TIGHTENING

But the worst may not be over. It may take some more pain before they get there, Hazlett said.

That may be especially true of the big drugmakers facing the patent expiration of their top revenue earners, as well as mounting clinical disappointments such as the failure of Pfizer's experimental torcetrapib cholesterol medicine that it hoped would replace Lipitor when its $13 billion-a-year cash cow goes off patent, which could be as soon as 2010.

Michael Weinstein, who follows the medical device sector for JPMorgan, wonders if Boston Scientific's job cuts will help right a ship listing under a debt burden from the $27 billion Guidant acquisition and shrinking sales of its most important products.

While the cuts are striking in size, what's equally striking is how limited they are in impact, owing to the company's oversized share base post the Guidant merger, Weinstein said in a recent research note.

And, he suggests, drastic job cuts may raise more questions than they answer.

What is the impact on research and development, what impact on sales support, and what impact on the company's pipeline, growth prospects, and near- and long-term competitiveness? Weinstein said.

Still, it's not all gloom and doom for health care, according to John Challenger, chief executive of employment outplacement consultants Challenger, Gray & Christmas.

I don't think we're seeing a downturn in health care anywhere near on the scale we've seen in automotive or housing and mortgage banking because there are parts of the sector that are really quite healthy, Challenger said, singling out innovative biotechnology companies in particular.

While he, too, expects to see more job cuts, many of the thousands who find themselves suddenly out of work will land on their feet, Challenger predicted.

I do think that there are places for people, he said. The big sales forces and customer service people don't need to stay in big pharma. Every organization needs sales people, so those kinds of customer service people can go other places.

The economy is basically in pretty good shape. I don't think people are going to have the kind of difficulty people had in 2001 or 2002, when they came out and unemployment was much higher, Challenger said.

That said, there's going to be people having a difficult time, he added. There will be some people who have a hard time finding their way back into the system.

Pfizer