Roche Follows Job-Cuts Trend

Roche has become the latest major drug company to launch a restructuring program in response to a worsening pharmaceutical business climate. Over two years, the company will eliminate 4,800 jobs, largely in the U.S. Overall, 6,300 employees, or 6% of its workforce, will be affected.

Among the planned reductions are 600 jobs in pharmaceutical R&D. In particular—and despite a multiyear investment of nearly $500 million—Roche will cease RNAi research efforts in Nutley, N.J.; Kulmbach, Germany; and Madison, Wis.

“We decided to react proactively and decisively,” Roche CEO Severin Schwan told investors in a conference call last week. “Our goal was to find the right balance of protecting our innovation capabilities on the one hand and increasing our productivity in a focused way on the other hand.” The program is expected to save up to $2.4 billion a year.

Product development activities involving another 800 positions, mostly in the U.S., will be discontinued or transferred to other Roche sites or third parties. Meanwhile, jobs outsourced to India are expected to rise by more than 60% to 650 in 2012.

Reorganization of manufacturing operations in California, Germany, and elsewhere will eliminate about 750 positions. Another 600 employees will be affected by the sale of production sites in Florence, S.C., and Boulder, Colo.

Overall, the Swiss firm anticipates transferring about 800 jobs internally and moving about 700 to third parties. Some job cuts will come through attrition. The cuts in pharma R&D are to be completed by the end of 2011.

Roche isn’t the only company announcing cost-cutting measures. In an investor presentation this month, AstraZeneca reiterated its plans to cut $1 billion in spending and about 3,500 jobs in R&D by 2014.

Pfizer recently reported that it expects to exceed its target of cutting 15% of its staff, or about 19,000 jobs, set after it acquired Wyeth in late 2009. Since then, the firm’s workforce has declined by 9,200 employees, primarily in U.S. sales, manufacturing, R&D, and corporate operations.

One bright spot is Novartis, which indicated to analysts in a strategic overview last week that, contrary to its peers in the industry, it expects to continue investing in R&D.