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Sep 17, 2012

Sanofi Job Cuts Imminent

  • Sanofi is expected next week to finally announce the massive round of job cuts in France that has been in the works since the summer, the French newspaper Le Figaro reports.

    Without citing sources, the newspaper says the French pharma giant will, on Sept. 25, announce to its works council, an organization that supports employees, plans to eliminate between 1,500 and 2,500 French workers, with most of the job cuts occurring in France. Many of the cuts are expected to be made through attrition, Le Figaro reported, though layoffs have not been ruled out.

    Back in July, Sanofi disclosed plans to the council for a large-scale job cutback in the research and manufacturing operations of Sanofi’s Pasteur vaccines unit in Toulouse and Montpellier, as well as in some support operations at the company’s Paris headquarters. Sanofi now employs about 28,000 employees in France, part of its global headcount of 113,719 employees as of last year, according to its Form 20-F filed by the U.S. Securities and Exchange Commission.

    The job cutbacks are expected to touch off labor strikes planned for Sept. 25 and Oct. 3, Reuters reported last week.

    In planning the job cuts Sanofi’s announcement defied pleas by France’s Industry Minister Arnaud Montebourg and other officials in the new administration of President Francois Hollande, who won election in May. Montebourg said July 11 that he found job cutting by profitable companies intolerable: "I told [CEO Christopher Viehbacher] that we already had enough trouble limiting hemorrhages at companies that are losing money…to accept that ultra-performing companies start destroying jobs."

    Two weeks later on July 26, addressing investors on the quarterly conference call following release of second-quarter results, Viehbacher said Sanofi needed to preserve its profitability by raising the productivity of its R&D operations, especially since its $20.1 billion acquisition last year of Genzyme: “The reality is, is that our research in France hasn't really come up with a new medicine in 20 years, and therefore, we have to take a much more productive approach to how we do this.”

    The planned job cuts, he said at the time, "is not really related to our cost reduction program per se. It's really about changing the R&D paradigm, which we've seen I think become successful in other countries.”

    Sanofi finished Q2 with a 16% increase in net profit, to €1.17 billion ($1.54 billion) from €1.01 billion ($1.33 billion) in the second quarter of 2011, helped by favorable foreign-exchange rates and lower-than-expected restructuring costs associated with the Genzyme purchase.

    Sources:


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