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Columns : Mar 15, 2013 ( )
Top 10 Biopharma Layoffs of 2012
Find Out Which Companies Axed the Most Workers Last Year!--h2>
2012 was not the best year for jobs, although it did get better as the year went on, going from an 8.3% unemployment rate in the U.S. in January to 7.8% in December. However, while layoffs might be happening less and less often, they’re still occurring in every industry, including biopharma, for a variety of reasons, including “eliminating redundancies” and “restructuring”.
Below is a list of biopharma companies with the largest numbers of layoffs during 2012. Companies are listed in order by number of layoffs, followed by the location(s) of job cuts, the stated reason or contributing factors, the dates of announcement and occurrence, projected savings, and costs and charges attributed to the layoffs.
Total workforce reduction: 7,500 jobs (5)*
Reason and/or contributing factors: Designed to “improve productivity and strengthen the company’s commercial, operations and research and development capabilities.”
Announced: February 2, 2012; occurring over two years
Projected savings: $1.6 billion annually by the end of 2014
Costs & charges: $2.1 billion
Total workforce reduction: 2,800 jobs (9% of workforce), across R&D, commercial functions, and operations
Locations: 2,100 jobs in Europe, 700 in the U.S.
Reason and/or contributing factors: Restructuring operations to eliminate redundancies and positioning company toward a more diverse portfolio of newer products.
Announced: January 18, 2012; occurring through 2016
Projected savings: About ¥200 billion (about $2.2 billion) over five years
Costs & charges: Approximately ¥70 billion ($767.6 million) during FY 2012–2016, of which ¥35.489 billion ($389.2 million) in “restructuring costs” were incurred during the fiscal year, ending March 31, 2012.
Total workforce reduction: 1,960 jobs
Locations: 330 positions at U.S. headquarters; 1,630 field sales positions across the U.S.
Reason and/or contributing factors: Restructuring following loss of patent protection for Diovan; slowdown in sales of Rasilez®/Tekturna® (aliskiren).
Announced: January 13, 2012 (1,960-job round); completed during Q2 2012
Projected savings: About $450 million annually by 2013. Novartis applied $100 million in savings to Q2 2012 results.
Costs & charges: $149 million in 2012 for restructuring of U.S. pharmaceuticals operations.
4. Merck KGaA
Total workforce reduction: 1,600 jobs (4)*
Locations: 1,100 positions in Germany; 500 positions in Switzerland
Reason and/or contributing factors: German cutbacks were part of a company-wide restructuring announced in February, following the failure of drug candidates cladribine for multiple sclerosis and Erbitux for lung tumors; Geneva campus shutdown part of a cost-cutting consolidation following the company’s 2006 acquisition of Serono.
Announced: September 4, 2012 (Germany); Swiss plans updated Sept. 29–30, 2012
Projected savings: No figures announced
Costs & charges: Not specified but within the €45 million ($60.1 million) recorded in Q3 2012 for company’s “Fit for 2018” consolidation initiative.
5. Abbott Laboratories
Total workforce reduction: 1,250 jobs
Locations: 700 diagnostic tests, heart stents, and pharma manufacturing jobs in U.S. and Puerto Rico; 550 established pharmaceuticals, medical devices, molecular diagnostics, and nutrition jobs worldwide
Reason and/or contributing factors: Discontinuation of some “mature” products in the hospital and laboratory diagnostics division, part of a restructuring plan announced in 2008 (700-job round); Need to align resources to better meet evolving business needs (550-job round).
Announced: January 25, 2012 (700-job round); October 17, 2012 (550-job round)
Projected savings: No projections announced for either round
Costs & charges: Part of $332 million or 18 cent per-share charge against Q4 2011 earnings (700-job round) for “restructuring/integration/other.”
Total workforce reduction: 1,100 jobs (3)*
Locations: 1,000 pharma research and early development (pRED) positions in Nutley, NJ, due to planned shutdown of site; 120 applied science jobs in Madison, WI, Iceland, and Germany; 100 diabetes care jobs in Indianapolis and Mannheim, Germany; 80 pharmaceuticals division-global informatics jobs in Indianapolis.
Reason and/or contributing factors: pRED activities restructured to make more resources available for the growing number of products in late-stage development, and further improve efficiency.
Announced: June 26, 2012; Occurring through end of 2013
Projected savings: CHF 370 million (about $407.4 million) annually from shutdown of Nutley facility. No other savings forecasts.
Costs & charges: CHF 1.3 billion ($1.4 billion) toward restructurings of pRED, and diagnostics division’s applied science and diabetes care businesses. CHF 49 million ($53.9 million) toward global informatics restructuring, which “mainly consist of severance payments and other employee-related costs.”
Total workforce reduction: 1,000 jobs (2)*
Locations: 900 of 28,000 positions in France (3% of workforce) to be eliminated through 2015, mainly through voluntary measures such as early retirements, and reassignments within the company. Also includes 100 of 1,700 positions at the Laval research site.
Reason and/or contributing factors: Restructuring of R&D operations intended to “establish new momentum for success in our research activities”; improve economic performance of industrial units to ensure their ability to compete in increasingly competitive vaccine markets; and streamline support functions. (2)*
Announced: September 25, 2012, occurring through 2015 (France); January 11, 2012 (Canada).
Projected savings: None announced specific to France and Canada. Part of five-year, €2 billion ($2.7 billion) cost-cutting initiative announced in September 2011, following $20.1 billion acquisition of Genzyme earlier that year and loss of patent protection for several blockbusters.
Costs & charges: None announced specific to France and Canada. Sanofi has disclosed a €107 million (about $146 million) charge against property, plant and equipment in the first half of 2012 toward “ongoing reorganization of research and development activities.
Total workforce reduction: 600 jobs
Locations: Mostly in European subsidiaries.
Reason and/or contributing factors: Part of restructuring intended to create “a more flexible commercial infrastructure and to maintain cost control” ahead of “multiple future product launches.”
Announced: June 14, 2012; “In progress” as of November 7, 2012
Projected savings: No figures announced
Costs & charges: Uncertain but could amount to up to a one-time charge of DKK 500 million ($91.4 million)
Total workforce reduction: Number of jobs undisclosed by Pfizer, though Bloomberg News reported the number at 600, citing an unnamed source
Locations: Across the U.S.
Reason and/or contributing factors: In its January 29 press release announcing Q4 and full-year 2012 results, Pfizer cited “a reduction in the field force” along with a decrease in promotional spending, both of which it said occurred “partially in response to product losses of exclusivity and more streamlined corporate support functions.”
Announced: Unannounced. Affected employees who would have been notified by December 20, 2012, Dow Jones reported, citing an unnamed source
Projected savings: Not specified, but included within the $515 million difference—a decline of about 10%—between the nearly $4.7 billion in adjusted Selling, Informational and Administrative (SI&A) expenses incurred during Q4 2012, and the nearly $5.2 billion in adjusted SI&A expenses recorded for Q4 2011.
Costs & charges: Not specified. Pfizer took $529 million in restructuring charges during Q4 2012 for “cost-reduction and productivity initiatives.”
Total workforce reduction: More than 500 full-time and contractor jobs, primarily administrative and R&D positions (1)*
Reason and/or contributing factors: Restructuring intended to align support costs with industry norms for companies of similar size and complexity, following weaker-than-anticipated sales of Provenge
Announced: Initial layoffs announced July 30, 2012 and planned to occur over a 12-month period
Projected savings: $150 million in annual savings
Costs & charges: $81 million one-time charge related to cash and non-cash restructuring expenses associated with the restructuring, recorded in Q3 2012.
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