Roche to Slash 4,800 Jobs to Save CHF 2.4B a Year

Restructuring will primarily affect pharmaceutical manufacturing and sales operations.

Roche announced plans to cut some 4,800 jobs, or 6% of its total workforce, as part of a move it hopes will save CHF 2.4 billion (about $2.4 billion) every year from 2012 onwards. Another 800 jobs will be moved about between the Roche sites, and 700 positions outsourced to third parties, Roche adds.

The vast majority of the planned workforce cuts will be in its pharmaceuticals division, particularly in the division’s manufacturing and global sales and marketing operations. Rearrangement of the global manufacturing network will in addition see the drug giant sell off its sites in Florence (South Carolina) and Boulder (Colorado). It says the overall package of measures will cost about CHF 2.7 billion (roughly $2.8 billion) from 2010 through to 2012.

The restructuring, which Roche is calling its Operational Excellence Program, will involve knocking some R&D projects on the head, including its RNAi research in Germany and the U.S, the firm admits. Meanwhile, plans are in place to reorganize internal operations and free up resources for upcoming Phase II studies with specific drug candidates.

Within the diagnostics division, Roche is planning on closing its site in Graz, Austria, and transferring the blood gas diagnostics development and manufacturing activities to Switzerland, where the division’s professional diagnostics unit is already headquartered. Diabetes care activities will be concentrated at the Mannheim headquarters in Germany, and R&D for insulin pumps will be transferred to Mannheim from the Swiss site at Burgdorf. In parallel, diagnostics chemical manufacturing and analytical service operations currently carried out at Mannheim will be moved across to the Penzberg site in Germany.

“This is a comprehensive, focused initiative to reinforce Roche’s long-term innovation capability in the face of increased price pressures and a more challenging market environment,” states Severin Schwan, Roche Group CEO. The firm projects this testing pricing environment will become even more difficult in future years, especially in the U.S. and Europe.

Nevertheless, Roche is at pains to stress that the slimming down exercise is being implemented from “a position of strength.” It notes that the 14 product franchises each generate annual sales of over CHF 1 billion, and in contrast with many of its competitors, the firm will not be majorly affected by patent expiries over the next few years.

Roche says its late-stage pipeline currently includes 12 new molecular entities, including six drug candidates in the growing field of personalized therapeutics. These include a BRAF inhibitor for skin cancer, T-DM1 and pertuzumab for Her2-positive breast cancer, MetMab for lung cancer, lebrikizumab for asthma, and a polymerase inhibitor for hepatitis C.