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Pharma takes the brunt as Roche cuts 4,800 jobs

World News | November 17, 2010


Kevin Grogan

Pharma takes the brunt as Roche cuts 4,800 jobs

Roche has unveiled details of its previously-announced restructuring this morning which will see a 6% reduction in its workforce in order to save 2.40 billion francs a year.

The Swiss major  will cut some 4,800 jobs over the next two years over the next two years out of its 82,000-strong workforce. Some reductions will be handled through normal attrition, Roche said, and in addition to the planned reductions, it will transfer roughly 800 jobs internally and 700 positions to third parties.

The vast majority of those cuts will be borne by Roche's pharmaceuticals division, especially in sales and marketing (2,650 positions) and manufacturing (1,350). Geographically, some 3,550 jobs will be lost in the USA, followed by Europe (1,300) and Switzerland (770). Roche noted that the main factors for this decision were the "setback of the diabetes medicine taspoglutide and structural adjustments in the primary care sales organisations, mainly in the USA and Europe".

In order to "improve capacity utilisation" in manufacturing some "technical operations" will be reorganised in California, Mannheim, Germany and various other sites. This will result in a reduction of 750 positions and Roche intends to seek buyers for its sites in Florence, South Carolina and Boulder, Colorado, which would affect an additional 600 jobs.

The Basel-headquartered giant added that "certain product development activities are expected to be discontinued or transferred, most of them from the USA, to other sites or third parties to improve overall productivity". Roughly 800 positions will be affected by the planned reductions or transfers. Also, following a "comprehensive portfolio review", it will discontinue certain activities in research and early development.

These include RNA interference research in Kulmbach, Germany, Nutley, New Jersey and Madison, Wisconsin. The plans include reorganising "certain internal functions to free up resources for upcoming Phase II studies of new molecular entities" and 600 positions will be affected.

Cashwise, "Operational Excellence" will cost 2.7 billion francs to implement over the next two years, of which 1.5 billion francs are cash-related. The programme is expected to generate savings of 1.8 billion francs in 2011, with projected savings of 2.4 billion francs from 2012 onwards.

Chief executive Severin Schwan  said "this is a comprehensive, focused initiative to reinforce Roche’s long-term innovation capability in the face of increased price pressures and a more challenging market environment". He added that these measures are necessary "to ensure sustained success of the company" and "we will make every effort to find socially responsible solutions for the employees affected".

The plan has gone down very well with analysts who are impressed by the level of cost-savings that Roche is targeting. Investors are also pleased, and the firm's shares were up at 10.15am (UK time) 2.3% to 145.70 francs.

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