Boehringer Ingelheim said today it will eliminate 500 to 600 jobs in Germany by the end of 2016, in response to what it said was “the changing competitive and market environment.”
Boehringer Ingelheim said the company intended to achieve the planned job reduction without layoffs through “natural attrition, retirements already agreed, and the expiry of temporary contracts,” according to a company statement issued this morning and translated from German.
“We know that it is a difficult situation for affected employees. We intend to implement the changes and job cuts in line with our culture and our values,” said Andreas Barner, chairman of Boehringer Ingelheim’s management board, said in the statement.
The company did not provide details of which operations would lose jobs, pending talks with employee representatives.
Boehringer Ingelheim said it employs more than 47,400 employees worldwide. About 14,000 are based in Germany, according to news reports last month that first reported the possibility of job cuts.
“We want to discuss the issues quickly, but also with due diligence and arrive at a common result. It would be good if it would be possible to conclude the negotiations in November,” added Stefan Rinn, Boehringer Ingelheim’s country manager for Germany.
At the same time, he added, individual labor councils would be informed of the proposed changes in detail, after which details will emerge, the company said.
The job cuts are part of the company’s “Journey” expense-reduction initiative, which is aimed at “a sustainable reduction in costs in Germany” that will save the company about €450 million (about $580 million) over two years. Part of the savings will be achieved by shifting global functions to locations outside Germany, Boehringer Ingelheim said.
The company cited growing pressure to contain prices for treatments, mentioning specifically its experience with Trajenta® (linagliptin), an oral DPP-4 inhibitor developed through a collaboration with Eli Lilly.
“Boehringer Ingelheim had to develop appropriate responses to these changes for the future,” the statement added.
Three years ago, Boehringer Ingelheim and collaboration partner Eli Lilly said they would not launch Trajenta in Germany. The companies blamed that nation’s recently-enacted price controls, which they said would not adequately reflect “the positive benefits” of their treatment.
Germany’s Reorganisation of the Pharmaceutical Market (AMNOG) regulates the price of newly approved drugs within their first year on the market. AMNOG follows Germany’s assessment of drug cost-effectiveness against a comparator drug through its drug-value advisory agency, the German Institute for Quality and Efficiency in Health Care (IQWiG), which makes recommendation to the country’s Federal Joint Committee (G-BA). Should a drug fail to demonstrate cost-effectiveness, its developer may be ordered to refund the Statutory Health Fund.
The cost-cutting follows a 5.4% drop in drug sales during the first half of the year, to €4.8 billion — as well as job cuts in the U.S. over the past year—namely all 1,100 jobs at the Bedford, OH, plant of Boehringer-owned Ben Venue Laboratories.
Boehringer began shutting down the plant after projecting it would lose $700 million over five years, on top of $350 million already spent correcting manufacturing problems like those that led to a 2011 shutdown – and infamously included a 10-gallon can with urine in a storage area. The plant was acquired earlier this year by Hikma Pharmaceuticals as part of an up-to-$300 million purchase of Ben Venue’s generic injectables business Bedford Laboratories.
