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July 15, 2013

Top 15 Job-Cutting Companies of 2013 (So Far)

Find out which companies have a long butcher’s bill for the first half of this year.

Top 15 Job-Cutting Companies of 2013 (So Far)

Which companies have been wielding the biggest axe so far this year? [© Marc Scott-Parkin - Fotolia.com]

  • #7. Astellas

    Number of job layoffs announced: 200 jobs

    Details: 115 positions at Farmingdale, NY, campus previously occupied by OSI Pharmaceuticals; the remainder at former Perseid Therapeutics site in Redwood City, CA. Both sites were shuttered on May 13.

    Why the company did it: Part of a restructuring of R&D designed to use more external resources, move into new therapeutic areas and innovative technologies including regenerative medicine and vaccines, speed up drug development, and ensure sufficient investment in late-stage clinical pipeline.

    Layoff-related charges/projected savings: The company has not disclosed projected costs or savings from the former OSI or former Perseid layoffs.

  • #6. Bristol-Myers Squibb (BMS)

    Number of job layoffs announced: About 400 jobs

    Details: The company said April 2 it is eliminating all roughly 400 jobs based in San Diego, with all operations to be shut down by the end of 2014. The jobs were created by Amylin Pharmaceuticals, which was headquartered in San Diego until the pharma giant acquired the biotech last year as part of a complex $7 billion, three-company deal. While 100 to 125 HQ employees were offered a transfer, the remaining 300 or so lost their jobs. 103 HQ staff positions were eliminated during the first two months of 2013: 67 positions located at or reporting into Amylin's San Diego HQ in February, plus an additional 36 HQ positions the previous month.

    Why the company did it: Consolidation of operations following Amylin acquisition, as well as what the company said is its resulting need to achieve greater efficiency and eliminate redundant positions.

    Layoff-related charges/projected savings: The company has not disclosed projected costs or savings from the Amylin layoffs. BMS reported a $33 million provision for restructuring during the first quarter, up from $22 million a year earlier, in first-quarter results disclosed April 25.

  • #5. Baxter International

    Number of job layoffs announced: 400 jobs

    Details: The company confirmed March 8 it will eliminate about 10% of its Puerto Rico workforce, but 44% of its workforce at the island commonwealth’s Aibonito manufacturing plant, where all 400 jobs were based. A first round of 100 job cuts is set for this summer. The remaining job cuts will occur gradually, Aibonito mayor William Alicea told the Latin American Herald Tribune in March.

    Why the company did it: Plans to shift some operations to the Dominican Republic, as well as build a $35 million full-scale line to upgrade Aibonito’s capabilities in manufacturing and packing drugs and intravenous solutions. Last year Baxter invested $2.5 million on production-line improvements at Aibonito.

    Layoff-related charges/projected savings: The company has not disclosed projected costs or savings from the layoffs, though it has said that charges incurred between 2009 and 2012 left the company with $202 million as of March 31 in reserves set aside for later “business optimization” or restructuring efforts—reserves it expects will be “substantially utilized” by the end of 2014, according to its Form 10-Q filing for first quarter 2013 with the U.S. Securities and Exchange Commission.

  • #4. Novartis

    Number of job layoffs announced: 682 jobs

    Details: 300 jobs (40% of workforce) to be eliminated over two years at its Lincoln, NE, consumer-drugs plant, the company said April 24. 262 Ciba Vision workers are to be laid off in Des Plains, IL, between June 30 and the second quarter of 2014, according to a WARN Act notice submitted to Illinois’ Department of Commerce and Economic Opportunity on March 20. About 120 jobs based at Novartis Institutes for BioMedical Research’s Alcon Labs campus in Fort Worth, TX, were eliminated, with many of those employees allowed to apply for jobs in Cambridge, MA, and other sites, the company said April 9.

    Why the company did it: Lincoln job cuts part of a restructuring that will reposition the plant long-term for production of solids and powder, principally for Sentinel, Excedrin, and Theraflu, with the goal of fostering “operational excellence, with minimal product complexity.” The Lincoln restructuring followed FDA re-inspections resulting in nine Form 483 observations, most concerning “the timeliness and completeness of handling consumer complaints,” Novartis said April 24. The company is also consolidating two of its units focused on eye care, Ciba Vision and Alcon Laboratories, and is concentrating U.S.-based eye disease research in Cambridge, MA. Production at the Fort Worth site will be scaled down to solid and powdered drugs only.

    Layoff-related charges/projected savings: Impairment charges and provisions of $51 million in the first quarter toward Lincoln restructuring, part of a total $66 million in company charges for “production transfers, impairment charges, and inventory write-offs” related to Lincoln, Des Plains, and a manufacturing site in Mexico City.

  • #3. Endo Health Solutions

    Number of job layoffs announced: About 700 jobs

    Details: About 15% of workforce to be eliminated worldwide, the company said June 6. The company has not detailed the types of jobs or the timing of the layoffs.

    Why the company did it: Part of a cost-cutting initiative that includes streamlining general and administrative expenses, optimizing commercial spend, refocusing R&D onto lower-risk projects and higher-return investments in generics, and pursuing buyers for its HealthTronics urological business and branded pharmaceutical early-stage discovery platform. Cost-cutting followed FDA rejection of a company citizen-petition aimed at stopping a generic version of its Opana ER® (oxymorphone HCl) moderate-to-severe pain drug from reaching the market. FDA also sent the company a complete response letter expected to delay its third try at approval for its long-acting testosterone undecanoate injection Aveed, since the company committed to a response by the end of the third quarter. Company looking to better position itself for looming generic competition for moderate-to-severe pain drug Opana ER and local anesthetic Lidoderm (lidocaine topical) for post-shingles pain.

    Layoff-related charges/projected savings: Company expects to spend about $60 million in severance payments and other charges on the job cuts and other cost-cutting moves, which are projected to generate some $325 million in annual cost savings when fully implemented by mid-2014. About $150 million of that is expected to be realized this year.

  • #2. Eli Lilly

    Number of job layoffs announced: Up to 1,624 jobs8

    Details: An anticipated, roughly 1,245 full-time U.S sales employees being eliminated starting June 30 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. On July 15, Lilly will begin 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.8

    The notice 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 will see “a small increase” in anticipation of planned launches of late-stage pipeline products.

    Why the company did it: Adaption 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). The drugs accounted for a combined 20% of 2012 revenues.

    Layoff-related charges/projected savings: Unspecified portion of $74.5 million charge taken against full-year 2012 earnings—including $64.7 million taken during the fourth quarter—related to “restructuring to reduce the company’s cost structure and global workforce”. No projected savings disclosed.

  • #1. AstraZeneca

    Number of job layoffs announced: 3,900 jobs

    Details: 2,300 selling, general, and administrative (SG&A) jobs, announced March 21, and 1,600 R&D, announced March 18. The layoffs bring to 5,050 the number of jobs—roughly 10% of the current workforce—slated for elimination through 2016. That’s about half the more than 11,000 jobs the company has announced eliminating since January 2012, beginning with a worldwide cutback of 7,500 jobs companywide, including its MedImmune subsidiary.

    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.

    Layoff-related charges/projected savings: The company will take an estimated $2.3 billion in restructuring charges—of which $543 million was taken in the first quarter, part of about $1.3 billion expected to be taken in 2013. “The balance of the remainder will be split broadly evenly between 2014 and 2015, with a small residual charge in 2016,” the company said April 25. Layoffs are expected to generate $800 million in annual savings by 2016.9