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Roche to axe nearly 3,000 jobs

Roche is cutting its pharmaceuticals division workforce by seven per cent

The Roche healthcare group in Basel has announced it is shedding around 3,000 jobs worldwide in its pharmaceuticals division over the next two to three years. The company said on Wednesday that the seven per cent cut in the division's workforce was aimed at improving its long-term profitability.

The main cuts will hit the Basel-based group’s operations at Nutley in the United States, where 900 jobs are to be lost. Another 200 jobs will go in the Californian city of Palo Alto.

In Britain, some 700 jobs are to be cut at Welwyn, and a further 600 will be axed in Basel. Roche also plans to phase out manufacturing operations at the Welwyn site and reduce chemical production in Basel.

Roche said it was committed to conducting the restructuring process in a socially responsible manner, and to keep redundancies to a minimum.

Roche has been contemplating a major reorganisation to try to cut costs and boost its 18 per cent margins in the pharmaceuticals sector, which are currently well below the industry average.

In a statement, the company said the decision to increase sales and reduce costs was aimed at improving the operating profit margin of the pharmaceuticals division to between 20 and 25 per cent over the next two to three years.

The plans include retaining a “robust” research commitment, optimising development expenditure, adapting production to current requirements and improving costs in administration.

They also call for strengthening sales by improving existing product strategies and intensifying efforts to license in or acquire new products.

Reviews are being undertaken in all affiliate companies to ensure that Roche’s sales and operations are driven more efficiently, the statement added.

Commenting on the move, the company’s chairman and chief executive, Franz Humer, was positive. “I am confident that the measures now being introduced will result in a sustained strengthening of our pharmaceuticals division, putting our business on a solid footing for the long term in a highly competitive pharmaceuticals market.”

The head of the pharmaceuticals division, William M. Burns, was also upbeat. “Not only will we concentrate on optimising our cost structure, but we will also continue to work actively on strengthening our sales,” he said.

“We will continue to rely on internally generated growth, augmented, as in the past, by carefully targeted licensing agreements, alliances and product acquisitions,” he added.

Unions in Switzerland, however, criticised the cutbacks. In a first reaction, the Syna union said it was “shocked” at the losses. “The 600 jobs which are to be cut in Basel represent about 10 per cent of the workforce there,” said Syna central secretary, Arno Kerst.

The restructuring programme was planned before another Swiss pharmaceuticals group, Novartis, unexpectedly bought 20 per cent of Roche’s voting shares earlier this month.

Roche’s difficulties stem from its failure to renew its depleted product line. At the same time, its sales force has been expanded to market several drugs that failed to come through.

Overall, Roche has cut back on staff in recent years. The company shed just under 3,000 jobs (four per cent of its workers) last year, reducing its total workforce to almost 65,000.

At the close of trading on Wednesday, Roche share prices were down by two per cent at SFr134.75. Over the past 12 months, shares have dipped in value by almost 25 per cent.

swissinfo with agencies

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