Roche to slash 4,800 jobs worldwide
The cutbacks come after the Swiss drug giant experienced a series of setbacks for its top-selling anti-cancer drug, Avastin, and saw disappointing results from new drugs in its pipeline.
The company says its pharma unit - particularly in the division's global sales and marketing organisation as well as in manufacturing - will be hit hardest by the cuts which will affect around six per cent of Roche's current workforce of 82,000. As many as 2,650 sales and marketing jobs could be axed, the firm says.
In addition to these cuts, the company plans to transfer 800 jobs internally and 700 jobs to third parties, resulting in 6,300 jobs being affected by the cost slashes.
Roche sees the cost-cutting measures, however, as a step towards reaching its savings target of 1.8bn Swiss francs next year and 2.4bn francs from 2012. “The disclosed savings target of 2.4bn francs per year from 2012 onwards is a positive surprise,” said DZ Bank analyst Thomas Maul.
“We might see double-digit upside revisions of earnings estimates (and) a clear improvement of sentiment," he added.
Despite Maul’s positive outlook, Roche’s budgeting plans - first announced in September - come as no great surprise. Until now, the Basel-based firm has been one of few drug majors to have resisted implementing cost-cutting measures in recent years. US and European regulatory pressures have already forced rival companies like Pfizer and Merck to make similar cutbacks.
Economic pressures cause of concern
Roche chief executive, Severin Schwan, expects economic pressures in the US and Europe to have a detrimental impact of 500m francs on the company this year. This figure could potentially rise to 1bn francs next year, he said.
This year Roche was amongst the worst performing firms in the global big pharma sector, with stocks falling by almost 19 per cent so far.
If restructuring program succeeds “the company will increase its profit by around 20 per cent to 25 per cent per annum,” said a Zurich-based trader, adding: “Given the low valuation, we see upside potential.”
