Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
Find out which firms put the most employees on the chopping block last year.
Biopharma companies needed a bit more effort to make this year’s list of top 10 job cutters compared with a year ago—nearly 50% more effort.
This year’s top 10 disclosed plans to eliminate a total of more than 28,000 jobs in 2013, up nearly 50% from the 18,910 jobs eliminated by the top 10 job cutters of 2012. Big pharma continues to slash their workforces—especially in high-paying positions—from research to administrative, and from manufacturing to sales.
Some of the cuts reflect responses to patent-cliff losses as protection expires for blockbusters. Other layoffs reflect the usual pruning of duplicate jobs that arises following mergers and acquisitions. But many of the job reductions augur further cutbacks in manufacturing in the U.S. and Europe, as companies seek the same savings from outsourcing production to Asia that numerous other industries have reaped over much of the past generation.
Below is a list of biopharma companies ranked by the 10 largest numbers of job reductions disclosed in 2013. Each company is listed by name, the number of disclosed layoffs, details on the layoffs if any, the justification furnished by the company for the cuts, and the size of the company’s total workforce.
#10. Endo Health Solutions
Number of job layoffs disclosed: About 700 jobs
Details: Company said June 6 it will eliminate 15% of its workforce worldwide. Company has not stated where jobs will be cut, but suggested at selling, general, and administrative (SG&A) and research job reductions by tying the layoffs to a restructuring whose goals include “streamlining general and administrative expenses, optimizing commercial spend and refocusing R&D onto lower-risk projects and higher-return investments in generics.”
Why the company did it: Part of a restructuring that included seeking more acquisitions, selling its HealthTronics urological business1 and branded pharmaceutical early-stage discovery platform, and restructuring its R&D effort. Restructuring was unveiled after company failed to stop a generic version of its Opana ER (oxymorphone HCl) moderate-to-severe pain drug from reaching the market.
Size of total workforce: Workforce shrinking from a total 4,629 employees as of February 20, 2013.2
#9. Actavis
Number of job layoffs disclosed: 813 jobs
Details: 350 jobs at Actavis Specialty Brands, the company’s business that more than 40 brand pharmaceutical products, primarily in the U.S. and Canada; all 310 jobs at Lincolnton, NC, manufacturing plant, which the company said it will shut down by mid-2015; 88 jobs in Rockaway, NJ, where Warner Chilcott was formerly headquartered; 65 jobs at manufacturing plant in Corona, CA.
Why the company did it: Actavis has cited need to eliminate staffing and operations overlaps following $8.5 billion acquisition of Warner Chilcott, completed October 1. Actavis said it would continue to employ 750 at U.S. Specialty Brands, which had a pre-layoff workforce of 1,100. Lincolnton, NC, production of prescription drugs will be shifted to an Actavis site in Salt Lake City, while over-the-counter drug production will be shifted to contract manufacturers. No explanation for job cuts at Rockaway, NJ, which Actavis retains as “New Jersey Corporate Office”. Job cuts in Corona, CA, part of a plan to reposition the facility into a “Center of Excellence” for manufacturing oral contraceptives, following a 12-year dispute with the FDA over agency allegations of GMP violations stretching back to predecessor Watson Pharmaceuticals.3,4
Size of total workforce: Workforce will shrink from a total of approximately 17,700 employees as of December 31, 2012.
#8. Takeda Pharmaceutical
Number of job layoffs disclosed: 1,500 jobs
Details: Takeda executive disclosed plan for workforce reduction of 5% or about 1,500 positions.5
Why the company did it: Planned job cut would be part of company’s “Project Summit” restructuring initiative, which followed the launch of a generic competitor to Takeda’s diabetes drug Actos. Company has not stated where jobs would be cut, but has identified “four areas of initiatives” in cost-cutting: sales and marketing, production and supply, R&D, and general and administrative.6 On February 4, company identified among its cost-cutting measures “consolidation or manufacturing and R&D facilities” in Europe.7
Size of total workforce: Workforce will shrink from a total 31,057 employees as of September 30, 2013.
#7. Boehringer Ingelheim
Number of job layoffs disclosed: 1,571 jobs
Details: All 1,100 jobs at Ben Venue sterile injectables plant in Bedford, OH, which will shut down, the company said October 4; all 240 jobs at API manufacturing plant in Petersburg, VA, announced August 15; 143 sales jobs and 35 administrative jobs in Paris and Reims, France, accounting for 20% of the company’s French subsidiary, disclosed by labor leaders September 9; and 53 jobs at Blanquefort, Gironde, France, following a planned shutdown of the plant operated by subsidiary Labso Fine Chemicals.
Why the company did it: Company cited projected operating losses at Ben Venue plant of more than $700 million over five years, on top of $350 million spent correcting manufacturing problems like those that led to a 2011 shutdown. Petersburg, VA, plant shut down after company concluded it needed to shrink manufacturing capabilities, then failed to find a buyer for the plant; company also cited overall production overcapacity in the pharma industry and competition from foreign-produced materials. Shutdown of the Blanquefort plant—the last operated by the company in France—was part of a reorganization of the company’s chemical plants designed to reduce manufacturing overcapacity.8
Size of total workforce: Workforce shrunk from 46,228 employees at the end of 2012.
#6. Eli Lilly
Number of job layoffs disclosed: Up to 1,624 jobs9
Details: An anticipated, roughly 1,245 full-time U.S sales employees eliminated starting June 30, 2013, in U.S. biomedicines division—of which about 560 “will have opportunities to be placed in open roles and, if so placed, will not be terminated”; as well as 379 fixed-duration contract employees, 97 of whom worked under contracts that ended before, but were extended to, June 30.9,10
Why the company did it: A response to “changing customer requirements, evolutions in the U.S. health care environment and the upcoming loss in exclusivity” and projected drop in sales as patent protection expires in December on the antidepressant Cymbalta (duloxetine hydrochloride), and in March 2014 on the osteoporosis drug Evista (raloxifene hydrochloride).
Size of total workforce: Workforce reduced to 37,925 employees as of the end of 2013.
#5. Novartis
Number of job layoffs disclosed: 1,804 jobs
Details: All 371 jobs at a respiratory R&D site in Horsham, West Sussex, U.K.; a net 325 jobs lost by eliminating 500 R&D positions companywide while adding 175 jobs in Cambridge, MA;11 all 300 jobs over two years at Lincoln, NE, consumer-drugs plant;12 all 300 jobs at Alcon contact lens plant in Mississauga, Canada; 262 Ciba Vision workers in Des Plains, IL; about 120 jobs at Novartis Institutes for BioMedical Research’s Alcon Labs campus in Fort Worth, TX; 72 mostly field-based marketing and sales support positions for diabetes and COPD products in the U.K.; 54 global legal, IT, HR, finance, procurement, and vaccines research positions in Emeryville, CA.
Why the company did it: Part of R&D restructuring designed to cut drug development costs; Lincoln plant being repositioned for production of solids and powder, principally for Sentinel, Excedrin, and Theraflu.12 Company is consolidating Ciba Vision and Alcon Laboratories, and concentrating U.S.-based eye disease research in Cambridge, MA. Fort Worth production will be scaled down to solid and powdered drugs only. Emeryville jobs were eliminated as part of a realignment of the facility away from vaccine R&D and more toward diagnostics.
Size of total workforce: Workforce reduced from a total 133,000 employees.
#4. Valeant Pharmaceuticals
Number of job layoffs disclosed: 2,700 jobs
Details: 10% to 15% reduction in workforce, or up to 2,700 jobs, following its acquisition of Bausch + Lomb for $8.7 billion
Why the company did it: Part of a restructuring designed to cut costs following the Bausch + Lomb acquisition, in part by consolidating locations. Company has not detailed where it will cut jobs, though Valeant chairman and CEO J. Michael Pearson told employees it will eliminate Bausch + Lomb’s global structure and reduce “significantly” its regional structure to reflect Valeant’s decentralized operating philosophy, which entails a corporate staff of fewer than 100 people.13
Size of total workforce: Workforce reduced from the combined 18,000 employees resulting from Bausch + Lomb acquisition.
#3. Teva Pharmaceutical Industries
Number of job layoffs disclosed: About 5,000 jobs
Details: 10% reduction in workforce planned by 2017; earlier this year, company committed to carrying out the job cuts as announced October 10 by then-CEO Jeremy Levin, D.Phil., who resigned less than a month later after 17 months in office. Company has not detailed where it will cut jobs and how operations would be affected.
Why the company did it: Part of a global restructuring intended to increase organization effectiveness, improve manufacturing efficiency, reduce excess capacity, and divest the company of non-core assets. The restructuring also addresses anticipated challenges, such as the launch of a generic version of the company’s top-selling drug, the multiple sclerosis treatment Copaxone.
Size of total workforce: Workforce to shrink from approximately 45,000 employees as of December 31, 2013.
#2. AstraZeneca
Number of job layoffs disclosed: 3,900 jobs
Details: 2,300 SG&A jobs, announced March 21, 2013, and 1,600 R&D, announced three days earlier.
Why the company did it: Part of a comeback strategy by CEO Pascal Soriot following years of clinical setbacks involving drug candidates the company hoped would make up for sales revenues to be lost from “patent cliff” expirations through 2014, when the company will lose U.S. patent protection for two of its biggest selling drugs—its proton pump inhibitor Nexium, and its asthma and COPD medicine Symbicort.
Size of total workforce: Workforce will shrink from a total of about 51,700 employees (Annual Report and Form 20-F Information 2012). The 2013 layoffs brought to 5,050 the number of jobs—roughly 10% of the current workforce—slated for elimination through 2016 as of December 31, 2013.14
#1. Merck & Co.
Number of job layoffs disclosed: 8,500 jobs
Details: 8,500 R&D and commercial operations jobs to be eliminated companywide through 2015, announced October 1. Merck has confirmed or disclosed layoffs as they have occurred: 500 jobs in West Point, PA, an unknown number in Puerto Rico, all 570 employees at a manufacturing plant in Swords, Ireland, and all 152 sales representatives based in Upper Gwynedd, PA who had promoted the antipsychotic drug Saphris (asenapine), effective February 3.15,16
Why the company did it: Part of a restructuring designed to help company bolster its pipeline and cut costs, while increasing flexibility through a more agile operating model that will target more spending to what it deems highest-potential growth opportunities.
Size of total workforce: The new layoffs, on top of an earlier-announced reduction of 8,500 jobs, will shrink by some 20% the company’s global workforce of 81,000 employees.
Notes:
1 On February 3, 2014, company announced it completed its sale of its HealthTronics to Altaris Capital Partners, LLC, for $85 million in upfront cash, “subject to cash and other working capital adjustments,” plus up to $45 million in additional cash payments based on the future operating performance of HealthTronics for a total price of up to $130 million. That deal followed the separate selloff of HealthTronics’ anatomical pathology services business to Metamark Genetics, for $9.2 million.
2 Company is expected to report fourth-quarter and full-year 2013 results on February 28.
3 Corona, CA, job reductions have continued into 2014, with the filing of a WARN Act notice by the company that it will lay off 56 additional workers at the plant. See California Employment Development Department, Worker Adjustment and Retraining Notification (WARN) Act Notices, Detailed Listing of WARN Information by Company Name (1-A)—2014, Revised February 11, 2014, pp. 2–4: http://www.edd.ca.gov/Jobs_and_Training/warn/eddwarncnda14.pdf
4 Actavis predecessor Watson Pharmaceuticals announced a consent decree with FDA back in 2002. See: http://ir.actavis.com/phoenix.zhtml?c=65778&p=irol-newsArticle_pf&ID=273770&highlight=
5 François-Xavier Roger, svp and CFO, disclosed the possibility of job cuts in comments published November 17, 2013 in The Wall Street Journal.
6 From the slide “Project Summit and Mid-Range Growth Strategy,” from the presentation Project Summit, October 31, 2013. See: http://www.takeda.com/investor-information/files/qr2013_q2_p02_en.pdf
7 See Takeda’s Summary of Financial Statements for the Nine-Month Period Ended December 31, 2013, page 3. http://www.takeda.com/investor-information/files/qr2013_q3_f_en.pdf
8 See “Boehringer Ingelheim France Sacrifices and Closes its Plant in Blanquefort,” L’Usine Nouvelle, April 25, 2013, translated via Google Translate: http://bit.ly/Ofue0T
9 On July 15, Lilly was to have begun laying off once-full-time sales reps reclassified as of April 23 into a 12-week period during which they could apply for open, available jobs. A Lilly spokesman told GEN on February 14 his company was not confirming specific numbers on how many of the full-time and reclassified sales staffers were ultimately laid off in 2013, except to say “it amounted to about 30% of our full-time sales force.” Figures and other details furnished by Lilly in an April 26 WARN Act notice to Indiana’s Department of Workforce Development. See: http://www.in.gov/dwd/files/WARN_LillyIndianapolis042613.pdf
10 Lilly’s WARN Act notice detailing the planned cuts (See note 9 above) was filed two days after Lilly confirmed in news reports plans to lay off about 1,000 U.S. biomedicine sales employees. At the time, the company said its cancer drug sales force was not affected, while its diabetes drug sales force would see “a small increase” in anticipation of planned launches of late-stage pipeline products.
11 Novartis has said the 175 Cambridge jobs will be filled by a mix of new employees and staffers relocating to the area from the Horsham, U.K., site and a second site where Novartis is cutting jobs—the Vaccines & Diagnostics Division site in Emeryville, CA, where 54 research jobs were eliminated in 2013. Another 167 jobs tied to a cancer research program based at Emeryville were included by Novartis among the net 325 R&D jobs eliminated; the cancer program will be shut down this year.
12 Lincoln plant repositioning is designed to foster “operational excellence, with minimal product complexity,” following FDA inspections that resulted in nine Form 483 observations, most concerning “the timeliness and completeness of handling consumer complaints,” Novartis said April 24.
13 Memorandum to Employees, July 28, 2013, filed the following day with the U.S. Securities and Exchange Commission. See Form 8-K: http://www.sec.gov/Archives/edgar/data/885590/000119312513305910/d574700dex991.htm
14 On February 6, 2014, company disclosed plans to eliminate 550 additional jobs—including all 168 staffers to be idled in a shutdown of an R&D site in Bangalore, India announced in January 2014; and positions in IT and branded generics in some emerging markets.
15 Merck said November 29 it would idle the Swords staffers over three years as its operations shift to Belgium, the Netherlands, and the U.S. Company disclosed sales-rep layoffs to Pennsylvania’s Department of Labor and Industry in December, after the company sold U.S. marketing rights for Saphris to Forest Laboratories for $240 million plus sales-based milestone payments.
16 Merck continued its job-cutting in 2014. In January, the company alerted state labor officials of plans to lay off 114 employees based in North Wales, PA, effective March 31. See: http://www.portal.state.pa.us/portal/server.pt?open=514&objID=1692512&mode=2
