Orion tightens its belt with 205 job cuts

By Gareth Macdonald

- Last updated on GMT

Related tags Parkinson's disease Central nervous system Nervous system

Finnish drugmaker Orion is to follow through on plans to cut its R&D workforce and shed 205 employees to sure up operations as generic pressure mounts on its leading Parkinson’s disease drugs.

The move, which is short of the 300 jobs Orion forecast it would lose in November, will cost around €3.9m ($5.2m) and reduce the workforce at its Espoo, Turku and Kuopio sites to 105, 55 and 15, respectively. The cuts will be implemented in the first half of the year.

An Orion spokesperson told in-PharmaTechnologist​ that: “No acute productivity or financial factors [are] in the background to Orion's personnel reductions. The company is presently in such good shape that we are able to prepare ourselves for the future in a timely fashion​.”

She added however that: “Without or by postponing these organisational changes, the time would inevitably come when our ability to cope would be threatened.

She went on to explain that Orion would continue to engage in R&D and would be increasing its emphasis on early-stage collaborations and outsourcing but could not provide further details for reasons of confidentiality.

In 2008, Orion entered into research partnerships with the Finnish company Medeia, the Swedish company Oasmia and India’s Aurigene and is working on drugs for the treatment of cancers and central nervous system (CNS) disorders.

Sho Matsubara, from Standard & Poor's (S&P) equity research unit, told in-PharmaTechnologist​ that the job cuts were “imperative given the generic challenges to its key brands,​” naming the Parkinson's disease drugs Comtes/Comtan and Stalevo as being most under threat.

We estimate cost savings of €22.5m from 2010 on, with half this figure in 2009, albeit more than offset by one-off restructuring charges of around €30m​.” Matsubara also said that S&P had reduced its 2009 share forecast and agreed with Orion’s forecast that EBIT margins will decline gradually over time.

Orion’s battle with generics firms has already begun. In December the firm filed a patent infringement lawsuit in the US against Indian drugmaker Wockhardt which had applied to sell a non-branded version of Stalevo.

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