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Insight & Intelligence™ : Jul 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.

You've seen GEN's list of the top 10 biopharma layoffs of 2012; now, following is a list of 15 biotech and pharmaceutical companies ranked by the number of layoffs they disclosed during the first half of 2013. Each company is listed with its number of job layoffs disclosed in 2013; details on the layoffs where known, such as how many people were affected in which operations, located where; when the layoffs were announced and will take effect, again where furnished; the justification for the layoffs furnished by the companies; and layoff-related charges against earnings and/or projected annual savings from the job cuts.

Some of the highest numbers of job cuts disclosed in 2013 were sales positions, which pushed the layoff numbers into four figures at Eli Lilly; and manufacturing positions (Novartis, Baxter, Impax, and to a lesser extent Pfizer)—though R&D jobs also continued to be sliced in 2013 as biopharmas opted for cheaper outside collaborations over costly internal R&D operations.

#15. Zogenix

Number of job layoffs announced: 55 jobs

Details: 37% of workforce eliminated across all functional areas, the company said June 5, leaving it with 93 full-time equivalent employees, including 57 in sales and marketing positions.

Why the company did it: Job cuts were among cost-reduction measures that included in part unspecified cost control initiatives to further reduce operating expenses and capital expenditures. The developer of drugs for CNS disorders and pain cited a need to conserve cash following slower-than-expected FDA review on its NDA for hydrocodone bitartrate extended release (Zohydro ER) capsules, an acetaminophen-free formulation of the opioid painkiller. FDA delay followed 11–2 vote (one member abstained) on December 7 by the agency’s Anesthetic and Analgesic Drug Advisory Committee, which recommended against approving Zohydro, citing its potential for drug abuse.

Layoff-related charges/projected savings: Company said it plans a one-time charge of approximately $1 million in the second quarter toward “most” of its workforce-reduction expense through 2013, according to a June 5 statement that noted the company as of that date had not raised any capital through its $25 million at-the-market ("ATM") facility.

#14. Mylan

Number of job layoffs announced: 117 jobs1,2

Details: Jobs were eliminated from the company’s administrative office for its Mylan Specialty unit in Basking Ridge NJ, the company disclosed to New Jersey state officials. Details about operations affected and numbers of jobs in each operation are unavailable.

Why the company did it: Restructuring and consolidation of operations to be closer to the company’s headquarters in the Pittsburgh suburb of Canonsburg, PA, where Mylan relocated its headquarters in April.

Layoff-related charges/projected savings: The company has not disclosed projected costs or savings from the Basking Ridge layoffs. During the first quarter, the company disclosed it spent $79 million on “restructuring and other special items,” nearly triple the $28.2 million spent during Q1 2012.

#13. Pfizer

Number of job layoffs announced: 124 jobs

Details: All 80 professionals based at CovX Research Unit in San Diego, which the company disclosed plans to shut down in February.3 Pfizer also submitted two WARN Act notices to New York state officials in which it disclosed plans to eliminate 34 jobs at its plant in Pearl River, NY, between December 28, 2012, and June 28 (March 26); and 10 jobs in upstate Rouses Point, NY, between June 30 and December 31 (March 1).

Why the company did it: San Diego layoffs reflect what the company says is a restructuring of R&D spending, and come more than four years after the company bought CovX and combined it with other units in the short-lived Biotherapeutic and Bioinnovation Center based in San Francisco. Pearl River layoffs part of a total 1,250 jobs the company said in 2010 it would eliminate by 2014. Rouses Point layoffs are part of plans first announced in 2009 and confirmed May 3 by Pfizer to The Press-Republican of Plattsburgh, NY, to shut that plant by the end of this year.

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

#12. AbbVie

Number of job layoffs announced: 125 jobs4

Details: 96 positions to be eliminated between June 21 and December 31, according to a WARN Act notice with Illinois’ Department of Commerce and Economic Opportunity on May 30.5 The company also reported an additional 29 layoffs in a second WARN Act notice on June 26, comprising the U.S. sales force for the lipid franchise, due to loss of patent exclusivity.

Why the company did it: Restructuring of operations following spinout from Abbott, which took effect January 2.

Layoff-related charges/projected savings: The company has not disclosed projected costs or savings from the layoffs. Company did disclose that in the first quarter, it shelled out $9 million for employee severance and contractual obligations—$7 million classified in cost of products sold and $2 million as SG&A expenses—toward past layoffs and restructurings.

#11. Alkermes

Number of job layoffs announced: Up to 130 jobs

Details: About one-third of the workforce to be eliminated at plant in Athlone, Ireland, over two years, the company said April 9. The company acquired the plant as part of its $960 million acquisition of Elan’s Drug Technology unit in 2011.

Why the company did it: Part of cutbacks that included ending production of several undisclosed older drugs accounting for a combined 5% of sales—products the company deemed “uneconomic” due to shrinking demand stemming from greater competition from generic drugs.

Layoff-related charges/projected savings: Restructuring charge of $12.5 million in the first quarter to cover severance and other employee-related expenses, plus noncash charges of $10 million in 2014 and $7 million in 2015, intended to reflect accelerated depreciation associated with the plant’s manufacturing operations. The layoffs and other cutbacks are projected to generate annual savings of between $15 million and $20 million by 2016.

#10. Aveo Oncology

Number of job layoffs announced: 140 jobs

Details: Cancer drug developer eliminating about 62% of its staff across all company functions, including clinical and regulatory operations, and business-development operations.

Why the company did it: Response to FDA signaling it would follow its Oncologic Drugs Advisory Committee, which on May 1 voted 13–1 to recommend the agency reject tivozanib for renal cell carcinoma (RCC). Following ODAC’s vote, Astellas Pharma pulled financial support for future trials of tivozanib in RCC, and backed off earlier plans to file an application for marketing authorization in Europe. But Astellas remains a partner with Aveo in the upcoming BATON Phase II clinical trials of tivozanib in triple negative breast cancer and metastatic colorectal cancer. Aveo expects to announce results from the colorectal cancer trial next year, and from the breast cancer trial in late 2014 or early 2015.

Layoff-related charges/projected savings: Restructuring projected to save it $190 million over two years, including $7.5 million to $8.5 million the company will shell out in personnel-related charges.

#9. Impax Laboratories

Number of job layoffs announced: 143 jobs6

Details: About 10% of workforce to be cut by August 4, mostly manufacturing jobs at its Hayward, CA, plant, as well as 20 jobs from its contract sales force and four sales management positions.

Why the company did it: Workforce cut part of a streamlining of operations “in response to the need to reduce expenses and adapt to changing market conditions,” and is projected to save $10 million this year, the company announced June 5. Company cited a drop in production volume at the Hayward plant after it shifted products to its more cost-efficient Taiwan plant, as well as previously decisions to discontinue products and delay launches. The sales job cuts were blamed on FDA’s delay in approving the Parkinson’s disease drug candidate Rytary, and were projected to cut sales expenses by about $2 million this year. Impax has struggled with manufacturing problems at its Hayward plant that resulted in the delay, followed by the end of a partnership with GlaxoSmithKline.

Layoff-related charges/projected savings: The company is expected to take a charge of about $2.4 million in the second quarter.

#8. Roche

Number of job layoffs announced: 170 jobs

Details: Company’s 454 Life Sciences subsidiary began eliminating about 110 jobs in Penzberg, Germany and 60 in the U.S., in Branford, CT, on April 23. Branford layoffs represent about one-third of the site’s total workforce.

Why the company did it: Elimination of company’s applied sciences business area within its diagnostic division, announced April 23 and set to take effect at year’s end. The company has cited pricing pressure on new drugs as well as funding cutbacks in life-sci research, including federal across-the-board budget cuts or sequestration. Roche will shift its polymerase chain reaction technology and nucleic acid product lines business to its Molecular Diagnostics business area, while custom biotechnology will move into the Professional Diagnostics business, and a new sequencing unit will be created.

Layoff-related charges/projected savings: The company said its financial outlook for 2013 remained unchanged, but has not disclosed projected costs or savings from the elimination of applied sciences, saying its financial reporting will reflect its new business structure when it publishes its 2013 half-year results later this year. Last year, company said it spent CHF 180 million ($190 million) related to employee termination and site closure costs associated with cutbacks in the applied sciences business.7

#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