Roche employees await news of job cuts

Falling drug sales are said to be making Roche consider major job cuts Keystone Archive

The Roche healthcare group in Basel has said it is too early to comment on a report that appeared on Monday, which said the company was planning huge job cuts.

A report in the Financial Times newspaper said that between 5,000 and 8,000 jobs could be lost in a move designed to improve sinking margins in Roche’s pharmaceuticals division.

That would represent between eight and 12 per cent of the total workforce of nearly 65,000.

The paper quoted an analyst as saying that 1,500 job cuts were in the offing.

Roche’s corporate communications department said that information about the company’s future plans would be released in May or June. “A process is underway in Roche’s pharma division to reduce costs and increase turnover,” a company spokesman said.

The FT said the group was conducting two reviews of its operations following a series of mishaps in its drugs pipeline.

It said the main report, undertaken by an internal task force was nearly complete. However, in the US, where Roche employs nearly 15,000 people, a separate report had been submitted by consultants from McKinsey, it added.

Roche has said the reviews cover corporate structure, operations and staffing levels.

The FT said that although Roche was trying to “beef up” its US operations, some drugs were coming off patent, potentially opening the way for the company to reduce its sales force.

Cuts were also likely at the administrative level and possibly in divisions outside pharmaceuticals such as vitamins.

Analysts say Roche shares have under-performed the sector over the past 18 months and that they expect the new chairman, Franz Humer, who is also chief executive, to improve profitability.

The pharma division recorded sales of SFr17 billion ($9.87 billion) in 2000, some seven per cent up on 1999 figures. With a workforce of 41,400, the division accounts for two-thirds of total Roche sales.

The Roche group has been under pressure recently from Swiss financier Martin Ebner, a shareholder in the company who publicly criticised the poor profitability at the annual meeting on April 3.

Ebner has been leading a campaign to reform the ownerships structure of Roche, which continues to give a majority of voting power to a few people in the company’s ruling families.

Roche shares fell slightly on Friday after authorities in the US said they wanted more information on a new drug to treat hepatitis.

The company has said it still hoped to launch “Pegasys” on time. However, analysts have said the setback could delay introduction of the drug by up to six months.

swissinfo with agencies