Replies to post #50644 on Biotech Values

[DewDiligence]

Headwinds and Tailwinds for Big Pharma’s Profits

If we overlook the small stuff and concentrate on the Big Picture, there are IMO three main trends, of which two are positive:

1. The leading edge of the baby-boom generation is now 61. Positive.

2. Recent events vis-à-vis U.S. patent law, especially the KSR case (#msg-19250528), will make it harder for companies to replace revenue from drugs going off-patent by making minor tweaks. For instance, in the current patent environment it will be difficult for drug companies to get away with a “remade” blockbuster like AZN’s Nexium. Negative.

3. The layoffs upon layoffs that ‘Biopharm investor’ has documented will lift all boats to some degree by allowing drug companies to cut selling costs without losing “share of voice.” Since Big Pharma currently spends more on selling than on R&D, this is a big deal. Positive.

[DewDiligence]

Amgen Studies Cost-Cutting Options

http://online.wsj.com/article/SB118670268015893661.html

>>
Layoff Rumors Circulate

By MARILYN CHASE
August 10, 2007

Biotechnology company Amgen Inc. is weighing cost-cutting options to offset declining sales of its top-selling anemia drug.

Economies under way will include slowing the growth of research-and-development spending for this year -- projected to expand at a slower rate than last year's outlay of $3.2 billion, or 23% of sales.

Also being tightened are capital projects, including expansion of manufacturing facilities, which will now be "moderated," the company said in a 10-Q quarterly report filed with the Securities and Exchange Commission.

Amgen has declined comment on rumored layoffs from its 20,000-person payroll. The rumors circulating around the Thousand Oaks, Calif., headquarters were reported in yesterday's Los Angeles Times.

"We haven't made any announcements about impact to staff," said spokesman David Polk, declining to speculate about future actions. Amgen closed facilities during the July 4 week in a long-planned move unrelated to its sales slump, he said.

A voice mail to staff by Amgen Chief Executive Kevin Sharer -- interpreted in some quarters as prefiguring possible layoffs -- was dismissed by the spokesman as a routine update for employees on recent federal actions tightening reimbursement policy for anemia drugs.

Second-quarter sales of Aranesp, Amgen's biggest product, slumped 19% to $578 million from $713 million a year earlier. Aranesp is prescribed to boost flagging red-blood-cell counts in patients suffering anemia due to kidney disease and cancer chemotherapy. Studies of risks of heart disease and cancer progression seen with overuse of such drugs have led to tighter dosing and lower reimbursement.

When the company announced those results July 26, Mr. Sharer told analysts: "We're taking actions to restore Amgen... We adjusted our cost base to be more in line with revenue growth, seeking efficiencies and making tough-minded choices."

In the 10-Q, released late Wednesday, Amgen added, "As a result of these challenges, we have commenced a global review of the company's business plans to identify opportunities to improve our cost structure."

Trimming growth of operating expenses is under way. The company is also refocusing spending on critical research and development and making changes to ongoing capital projects. Amgen said these include delay in Ireland manufacturing expansion, revisions to planned manufacturing expansion in Puerto Rico and moderated research-facility expansion. Amgen posted related charges of $289 million in the second quarter.

"We may be required to take further actions to reduce costs," Amgen added in the 10-Q, because of ongoing impact of strict new rules on anemia drug use by the federal Centers for Medicare and Medicaid Services, and uncertain outcome of fall meetings of advisory panels to the Food and Drug Administration covering renal drugs and drug safety.
<<

[DewDiligence]

Not Big Pharma, but same result…
Medtronic Cuts Jobs Amid Slowdown in ICD Market

http://www.reuters.com/article/marketsNews/idUKN0634829820070906

>>
Thu Sep 6, 2007 12:46PM EDT
By Debra Sherman

CHICAGO, Sept 6 (Reuters) - Medical device maker Medtronic Inc (MDT), feeling the pinch of a slowdown in one of its key markets, will eliminate about 900 jobs, or about 2.4 percent of its work force, generating annual savings of $125 million, according to a government filing.

Of those positions, 349 had been cut as of July 27.

The job cuts will be realized through early retirement packages, voluntary and involuntary separations and substantially completed by the end of its fiscal year in April 2008, the filing said.

Minneapolis-based Medtronic, which had revenues of $12.3 billion and employs over 37,000 people worldwide, competes with St. Jude Medical Inc (STJ) and Boston Scientific Corp (BSX) in the market for heart pacemakers and implantable cardioverter defibrillators, known as ICDs.

The company also makes vascular products, insulin pumps, and artificial spinal discs, but its biggest market is for products that manage irregular heartbeats, such as pacemakers and ICDs.

The ICD market has slowed dramatically since 2005 following a wave of product recalls, mostly by Guidant Corp, which was later acquired by Boston Scientific.

A Medtronic spokeswoman said about 500 jobs will be eliminated from the company's cardiac rhythm management business, which makes ICDs, and roughly 200 jobs will cut from its cardiovascular business, which makes stents and catheters. An additional 200 jobs will be eliminated from its Physio-Control subsidiary, which makes external defibrillators and will soon be spun off into an independent company. Most of the affected employees have been notified, the spokeswoman said.

We've known Medtronic was looking at scaling back for a while. The number is the news," said Michael Barr, an analyst with Victory Capital Management, which owns Medtronic shares. "As the market slows, it's only appropriate."

The job reductions, said Barr, are deep enough for now.

"This is still a highly profitable business, but it makes sense to adjust to the reality of the market, which is that it isn't recovering as fast as people had hoped."

Barr said he thinks most investors have "thrown in the towel" on hope the U.S. ICD market will grow over 10 percent any time soon.

"That's why (Medtronic shares) are trading at 19- or 20- times earnings," Barr added. "Historically, Medtronic has traded at a 60 percent premium to the S&P 500. Now it's a 30 percent premium."

Medtronic shares were up 47 cents at $54.12 around midday on the New York Stock Exchange.
<<

[DewDiligence]

Growth in Drug Sales to Slow in 2008

[This write-up quantifies the effect of the changes that seasoned investors in the drug/biotech sector have known about for some time.]

http://online.wsj.com/article/SB119387833538878513.html

>>
By JEANNE WHALEN
November 1, 2007

Sales of prescription drugs in the U.S. are set to grow next year at their slowest pace in decades, as tougher regulation and cost-control measures take their toll, according to IMS Health Inc., a health-care information and consulting firm.

The slowdown in the industry's largest market will contribute to a global deceleration in pharmaceutical sales, IMS reports today in its annual forecast. The report, closely watched in the pharmaceutical industry, forecasts that U.S. sales of branded and generic prescription drugs will grow between 4% and 5% next year, to as much as $305 billion. That is a deceleration from a rate of between 5% and 6% this year, and the slowest pace since 1963.

IMS, which analyzes sales and prescription data, expects global pharmaceutical sales to grow between 5% and 6% next year to as much as $745 billion. That compares with growth of 6% to 7% this year.

Several factors are contributing to the slowdown. For one, many of the industry's top-selling branded drugs are losing patent protection, giving cost-conscious insurers the opportunity to use cheaper generics. IMS forecasts that about two-thirds of prescriptions dispensed in the U.S. next year will be generics, up from 50% in 2003.

Drug companies, meanwhile, aren't churning out enough new medicines to keep dollar sales growing at the same pace. And regulators such as the Food and Drug Administration, burned by several drug-safety scandals, are casting a tougher eye on new products before allowing them on the market.

Some of the industry's biggest companies -- including Pfizer Inc., GlaxoSmithKline PLC and Novartis AG -- have announced job cuts and other cost-saving measures in recent months as they adjust to leaner market conditions [#msg-21837592]. More belt-tightening could come, says Murray Aitken, senior vice president of health-care insight at IMS. "There will be a need for further restructuring and adaptation of the business model to reflect the realities of what companies have in the pipeline and the environment they face," he says.

In a mark of how much the U.S. market has changed, it is set to grow next year at the same rate as Europe's, where frugal state-run health systems long ago began reining in drug spending.

Emerging markets will continue to be a bright spot for the industry. The top seven emerging markets will grow at a rate of 12% to 13% next year, IMS forecasts. Improving economies and greater spending on health care will drive the growth. These emerging markets will make up about 12% of global sales but will contribute 24% of sales growth next year.

By contrast, the industry's top seven markets, including the U.S., Europe and Japan, for the first time will contribute less than 50% of global sales growth. In 2006, they made up 60% of growth.

Drugs with $20 billion in annual global sales could lose patent protection next year [#msg-23029249 lists some of the upcoming patent expirations for biologics], becoming the latest blockbuster drugs launched in the 1990s to meet generic competition. Because so many generics are coming to market, the cost of treating patients for cholesterol, depression, osteoporosis and other illnesses is falling sharply, IMS reports.
<<

[DewDiligence]

Bristol-Myers Is About to Get Smaller

http://online.wsj.com/article/SB119644171556509623.html

>>
By PETER LOFTUS
November 30, 2007 2:25 p.m.

The drug maker is expected to cut its work force by at least 10%, or about 4,300 jobs, and potentially close up to half of its manufacturing plants as part of a long-awaited cost-savings program to be announced next week, Wall Street analysts predict.

Also, the New York company might lay out plans to shed some of its nonpharmaceutical assets, a possibility that Bristol executives have hinted at this year. Some analysts believe these units, which make baby formula and other products, could fetch $10 billion.

Bristol, which co-markets the popular anti-blood-clotting drug Plavix with Sanofi-Aventis of France, is undertaking the moves to boost profit margins and increase its focus on areas of growth such as biologic therapies and treatments for diabetes and cancer. Also, like the situation at many of its rivals, Bristol's sales growth has come under pressure from competition from generic drugs.

Bristol Chief Executive James Cornelius and his lieutenants are expected to unveil details of the cost-saving plan Wednesday in a meeting with investors and analysts in New York. Mr. Cornelius first disclosed in July that job cuts were likely to result from a strategic review of the business, and last month he said some cost cuts were already under way.

Mr. Cornelius said in October the company has made occasional job cuts and "productivity improvements," but next week's plan is likely to be "much larger." Executives have suggested cuts are likely to be made primarily in the areas of back-office and infrastructure functions, as opposed to research and sales and marketing.

The new program "will include transforming and streamlining the company to increase productivity and focus more resources on discovering, developing and delivering innovative medicines and other health-care products to patients," Bristol spokesman Tony Plohoros said Wednesday, adding that Bristol isn't disclosing exact plans until next week. (On Friday, Mr. Plohoros disclosed he will be leaving the company as part of the program.)

Big Job Cuts Predicted

Analysts at UBS and Citigroup both predicted job cuts between 10% and 20% of the work force. That could result in savings of $1 billion to $2 billion; Bristol had $17.9 billion in sales last year. UBS analyst Roopesh Patel said Bristol could shutter up to half of its 38 manufacturing sites around the world.

Bristol's work force has held steady at about 43,000 since 2004, according to its annual reports. Since then, other large drug makers have cut jobs and costs significantly, including Pfizer Inc. and Merck & Co. [#msg-21837592]. In addition to battling generic-drug makers, big pharmaceutical companies have faced difficulties getting new products on the market to replace lost sales.

"The business is changing pretty rapidly and the cost structure out of the industry is out of sync," Deutsche Bank analyst Barbara Ryan said in an interview. "You have a pretty violent loss of earnings from patent expirations and therefore an inherent cyclicality to the earnings. The industry needs to find ways to be more efficient and also to make its cost structure more flexible."

Ms. Ryan believes the size of the work-force reduction will be about 10%, with a good portion of those affected being in manufacturing. She predicts the savings could add five cents to 10 cents to Bristol's annual per-share earnings. Ms. Ryan rates Bristol shares at "buy" and has a price target of $35, or 19% higher than Thursday's closing price of $29.40. The stock was recently trading at $29.56, up 16 cents.

For full-year 2007, Bristol has said it expects to earn $1.42 to $1.47 a share, excluding any restructuring charges and certain other items, rising to $1.60 to $1.70 a share in 2008. In 2006, Bristol earned $1.09 a share excluding certain items, which reflected a downturn in Plavix sales due to the temporary availability of a generic version.

Takeover Speculation Has Waned

Whether Bristol's moves would make it a more attractive takeover candidate remains to be seen. The company has been the frequent subject of takeover speculation since last year, but that talk has died down more recently. Bristol executives have played down such talk, saying the company has a "good future" remaining independent.

Ms. Ryan believes a takeover of Bristol-Myers is "pretty unlikely," partly because one rumored buyer, Sanofi-Aventis, doesn't have a strong stock price to help fund such a deal. A financial source close to the matter said Bristol isn't interested in a merger with Sanofi and prefers to grow independently, Dow Jones Newswires reported Wednesday.

Bristol shares are up 11.7% year-to-date, above the 3.6% gain by the S&P 500. The stock's valuation, at about 20 times projected 2007 earnings, is among the highest in the industry, and its market capitalization is about $58 billion, which would be no small meal for a buyer to digest.

A key element of Mr. Cornelius's strategic review was to group the company into four "clusters" and review strategic options for each: cardiovascular and metabolic-disease treatments; specialty medicines; mature brands; and non-pharmaceutical health-care products. The company has examined options for each cluster that might enhance shareholder value.

As a hint of how this might play out, Bristol has pointed to its agreement made in June to sell the Bufferin and Excedrin brands of pain relievers in Japan and other Asian countries to Lion Corp. of Japan for $250 million. Mr. Cornelius called this a "mature, noncore business" and said "there will be more of this in the future."

The pharmaceutical unit generates nearly 80% of Bristol's total sales. The rest consists primarily of Mead Johnson nutritionals; ConvaTec, which sells wound-care and other products; and a medical-imaging unit.

If Bristol were to sell the nutritionals unit, which had about $2.3 billion in sales last year, it could fetch a price between $5 billion and $7 billion, said Deutsche Bank's Ms. Ryan. One potential buyer is Nestle SA of Switzerland, some market watchers say. Nestle doesn't comment on market rumors, a spokesman said.

Combined, the non-pharmaceutical assets could generate sale proceeds of more than $10 billion, Citi analyst George Grofik wrote in a note.

UBS's Mr. Patel said it's possible Bristol would unload certain "low-growth mature" products or businesses such as the medical-imaging unit. The analyst also suggested Bristol might even want to get out of its co-marketing arrangement with Sanofi-Aventis for the anti-hypertension drug Avapro. Bristol recorded $1.1 billion in sales from the drug last year, but Mr. Patel said it's "apparently not a very profitable drug" for Bristol.
<<

[DewDiligence]

Almost every other Big Pharma
has done it, so why not NVS?

http://online.wsj.com/article/SB119731361630919716.html

>>
Novartis Plans Revamp to Cut Bureaucracy

By JEANNE WHALEN
December 11, 2007

Novartis AG is preparing a companywide restructuring aimed at reducing layers of management and helping the company navigate an increasingly difficult pharmaceutical market, Chief Executive Daniel Vasella said in an interview.

Novartis plans to disclose more detail about the restructuring by mid-December and elaborate further in February, Dr. Vasella said. The company has already told employees in its internal newsletter to prepare for change.

Dr. Vasella, a Swiss physician whose views on the pharmaceutical business are closely watched, said Novartis must become less bureaucratic in order to handle new challenges facing the drug industry: aggressive competition from generic companies, increasingly safety-conscious regulators and more cost-conscious payers such as state health-care systems and insurers.

Novartis, which makes Diovan for blood pressure and Gleevec for leukemia, is one of the top five drug companies by sales globally. Most of its rivals are also looking to restructure and grow as they face harder times inventing and selling branded prescription drugs. Many are laying off staff, and some are diversifying into other areas of health care, including vaccines, generics and diagnostic tools.

The changes at Novartis would come on top of some job cuts and management changes the company laid out in October, when it reported disappointing third-quarter earnings. Dr. Vasella said he has continued scrutinizing the organization since then and is looking to remove several layers of management, with the main goal of positioning employees to make decisions more quickly and simply. The restructuring will involve some job cuts, but Dr. Vasella declined to say how many.

It follows a tough year for Novartis, which faced generic competition on some of its biggest drugs and failed to gain U.S. Food and Drug Administration approval for two new products. Earlier this year, it was also forced to withdraw from the market in the U.S. and Switzerland its drug for irritable- bowel syndrome, Zelnorm, after safety concerns.

"Now that we had quite a difficult year, a challenging year after so many years of gaining market share and growing very dynamically, we have an opportunity now," he said at company headquarters in Basel, Switzerland. "When things get tighter, and you get more pressure, then it's much easier to say look, it's just not going to continue this way. We need to rethink the way we do it."

One new rule Dr. Vasella has set: There should be no more than six layers of employees in any Novartis division, from the lowest-ranking person up to the division head. Novartis has four divisions: pharmaceuticals, generics, vaccines and diagnostics and consumer health, which includes over-the-counter medicines.
<<

[DewDiligence]

Novartis to Cut 2,500 Jobs

[This move was telegraphed three days ago when CEO, Dan Vasella, spoke to the WSJ (#msg-25181446). The 2,500 jobs (2.5% of NVS’ worldwide workforce) are in addition to the 1,300-job reduction announced earlier this year. NVS’ own PR can be read at
http://cws.huginonline.com/N/134323/PR/200712/1175700_5_2.html .]

http://www.reuters.com/article/marketsNews/idUKL1361563020071213

>>
Thu Dec 13, 2007 1:22am EST

ZURICH, Dec 13 (Reuters) - Swiss drugmaker Novartis AG (NVS) announced a deep restructuring plan on Thursday, slashing 2,500 jobs, or 2.5 percent of its global workforce, aiming for annual savings of $1.6 billion in 2010.

Novartis said it would take a charge of $450 million in the fourth quarter for the measures, which aim to combat price pressures on drugs, higher research costs, tighter regulations and more generic competition.

The cuts come just two months after Novartis revamped its U.S. drugs business, cutting 1,260 jobs to help generate annual savings of $230 million.

The new restructuring plan is an effort to bolster investor confidence after Novartis suffered a series of setbacks this year, tarnishing what should have been a bumper year for the launch of new blockbusters.

Key diabetes drug Galvus has been delayed because of safety concerns and Novartis also cut its full-year outlook after withdrawing Zelnorm from U.S. shelves in March.
<<

[DewDiligence]

Wyeth Cuts 1,200 US Sales Jobs

http://biz.yahoo.com/ap/080328/wyeth_job_cuts.html

>>
Friday March 28, 6:55 am ET
By Linda A. Johnson

TRENTON, N.J. (AP) -- About 1,200 U.S. sales representatives at Wyeth have been told their positions are being eliminated as of Monday, the drug maker said.

The move is part of a major companywide program, announced nine weeks ago, to cut jobs and other costs and redesign the business of Madison, N.J.-based Wyeth, which is struggling with increased competition and fewer new drugs, like most pharmaceutical companies.

Wyeth spokesman Doug Petkus said Thursday the sales representatives, in both the company's pharmaceutical and consumer health divisions, were notified Wednesday that their jobs were being cut.

"They're field-based sales reps across the U.S.," he said.

Petkus said they will get severance pay and continuing benefits. He would not say how many U.S. sales reps the company has.

In its last cutbacks, in 2005, Wyeth reduced its sales force by about 15 percent.

In late January, Wyeth told managers about 10 percent of its 50,000 employees worldwide might lose their jobs by 2011 under a sweeping reorganization dubbed "Project Impact."

On Thursday, Petkus said that estimate isn't definitive.

"We're still evaluating the composition of our global work force," he said. "Our short-term objective is to achieve a reduction in force of 4 to 6 percent by the middle of the year. We are on track to achieve that."

Wyeth makes the blockbuster children's vaccine Prevnar and the world's top-selling antidepressant, Effexor, along with Advil pain reliever, Centrum vitamins, Chapstick and other well-known consumer products.

In 2007, its net income and revenue both jumped 10 percent. But company executives said then that new generic competition for No. 4 seller Protonix, a severe heartburn drug with 2007 sales of nearly $1.9 billion, would keep total revenue flat this year.

Four weeks ago, Wyeth won approval from the Food and Drug Administration for antidepressant Pristiq, its planned successor to Effexor, although analysts expect Pristiq to generate less than half Effexor's $3.8 billion in annual revenue. That snapped a bad streak: Since the prior spring, the FDA on four occasions had rejected an experimental Wyeth drug or demanded more data or a new patient study.

Wyeth shares rose 1 cent to $41.84 in regular trading Thursday, then dipped 13 cents in after-hours trading. Its shares were trading at about $60 last June.
<<

[DewDiligence]

Schering-Plough Announces More Cuts

[The Zetia/Vytorin sales falloff has caused the large debt from the Organon acquisition to loom large.]

http://biz.yahoo.com/ap/080403/schering_plough_cuts.html

>>
Thursday April 3, 2:07 am ET
By Linda A. Johnson, AP Business Writer

Schering-Plough Targets Up to $1 Billion in Further Cost Cuts After Critical Report on Vytorin

TRENTON, N.J. (AP) -- Days after top cardiologists criticized Schering-Plough Corp.'s crucial cholesterol drugs Vytorin and Zetia, sending its stock price tumbling, the drugmaker late Wednesday announced a new round of cost-cutting and layoffs.

The new reductions -- 10 percent of staff and $1 billion in annualized cost savings -- come on top of $500 million in reductions announced after the Kenilworth, N.J.-based company bought biopharmaceutical firm Organon BioSciences NV in November for $14.4 billion.

The cuts will disproportionately hit the United States and will include everything from consolidating its more than 60 manufacturing plants and streamlining management to trimming overhead and spending on research and development, Chief Executive Officer Fred Hassan said in a hastily announced conference call Wednesday evening.

He said the plan calls to reduce headcount by 10 percent worldwide and the goal is to make 80 percent of the $1.5 billion in total cuts by the end of 2010, with the rest by 2012. Schering-Plough has 55,000 employees, including 8,000 in New Jersey.

Headquarters costs, including sales and marketing, will be targeted first and manufacturing changes will come later to prevent disruptions in supplies and products.

"No area will be exempt," Hassan said.

He did say that the company will prioritize "high-potential" research projects, including its heavily touted experimental drug to prevent deadly blood clots.

"We will not give up our relentless focus on growing the top line," he said. "We will avoid unwise short-term actions."

Hassan said the initiatives respond to "dramatically intensifying pressures" in the pharmaceutical industry, what he termed "confusion" in the U.S. cholesterol market and "a new political and overall environment" in the U.S.

Analyst Steve Brozak of WBB Securities Ltd. said that sounded like code for "it's not our fault."

"If it's not management's fault, then whose is it?" he said.

Brozak said he gives the company credit for facing "the reality that marketing is not the answer to what the pharmaceutical industry has devolved into," but is disappointed that research spending will be cut, rather than Schering-Plough focusing on partnerships to develop innovative new drugs.

The last-minute announcement of and 5:45 p.m. start to the conference call, he said, showed it was timed to "to be more visible to Wall Street and less visible to Main Street."

Schering-Plough's stock plunged 26 percent Monday and then hit a new 52-week low Wednesday before ending regular trading down 89 cents, or 6 percent, to $13.86. The shares regained 24 cents in after-hours trading.

The drops come after a long-awaited presentation Sunday at a major heart specialists' conference of a study showing Vytorin is no more effective at preventing plaque build up than generic Zocor, which costs about one-third as much. Vytorin combines Schering-Plough's Zetia and partner Merck & Co.'s Zocor.

Top cardiologists at that meeting said that based on the findings of the study, which the companies did not release until nearly two years after it ended, doctors should return to older, tried-and-true treatments for high cholesterol. The delay triggered wide-ranging investigations by two congressional committees amid suspicions the data was withheld to protect sales of the two drugs -- $5.2 billion last year, which the companies split.

Merck spokeswoman Amy Rose said she didn't know of any plans for new cuts there but noted Merck started a comprehensive global restructuring program in December 2005. It was designed to bring a total of $4.5 billion to $5 billion in cost savings, including $1.2 billion from supply-chain changes. Merck has since eliminated 7,200 positions and closed five manufacturing plants and will provide a progress update when it gives its quarterly earnings report April 21.

Hassan defended Zetia and Vytorin, saying they do what they were designed to do -- lower bad cholesterol -- and that there is a huge unmet need in that area because many people either are not being treated for cholesterol problems or have not reached their cholesterol goal.

"We're doing a good job reaching out to the doctors to remind them of the lower-LDL-is-better message," Hassan said.

Whitehouse Station, N.J.-based Merck is the world's No. 8 drug maker and Schering-Plough is No. 16, according to health information company IMS Health.
<<

[DewDiligence]

Merck to Cut 1,200 US Sales Positions

http://biz.yahoo.com/bw/080505/20080505006337.html

>>
Monday May 5, 4:30 pm ET

WHITEHOUSE STATION, N.J.--(BUSINESS WIRE)--Merck & Co., Inc. today announced plans to reduce the size of its U.S. sales force by 1,200 positions.

"Merck is taking this step as part of our previously disclosed, continuing efforts to optimize our cost base and improve Merck's effectiveness and efficiency across all aspects of our business as part of our Plan to Win strategy," said Kenneth Frazier, president, Global Human Health. "With eight successful launches of Merck products approved in the U.S. since 2006 now behind us, and with an unexpected delay in a new product approval, we decided to accelerate the achievement of efficiencies we anticipate gaining as we transition to our new commercial model in the U.S."

The Company does not anticipate any disruption in its service to customers as these changes occur.

Affected employees, who are located throughout the U.S., will be notified by the end of May; separations will be completed by the end of July. As Merck takes this difficult but necessary action, the Company is committed to treating employees with fairness and respect. Eligible employees will receive benefits and other services to assist them.
<<

[DewDiligence]

Medtronic to Cut 1,100 Jobs

http://www.reuters.com/article/marketsNews/idINN0650112820080506

>>
Tue May 6, 2008 2:53pm EDT
By Susan Kelly

CHICAGO, May 6 (Reuters) - Medtronic Inc (MDT) on Tuesday said it would eliminate about 1,100 jobs this year in businesses whose growth has slowed, including its flagship heart rhythm device unit.

The company said it would also consolidate certain manufacturing and research and development operations as part of a realignment of its global work force.

Medtronic, based in Minneapolis, expects to take restructuring charges in its fiscal fourth quarter, ended April 25, and first quarter of fiscal 2009, a company spokeswoman told Reuters.

"We're making reductions where it makes sense, where we need to get more operating leverage, and also making sure that businesses that haven't been growing at previous rates are staffed appropriately going forward," said Medtronic spokeswoman Marybeth Thorsgaard.

Cuts will occur across the company, although in some businesses the company will add positions, Thorsgaard said. Medtronic's revenue grew 12 percent in its most recent quarter, though revenue in the cardiac rhythm disease management unit rose just 3 percent.

As part of the restructuring effort, Medtronic will move its endovascular manufacturing operations to Galway, Ireland, from Santa Rosa, California. The endovascular division makes stent grafts to treat aortic abdominal aneurysms.

It also intends to relocate the diagnostic and monitoring portion of its cardiac rhythm disease management business to Minneapolis from the Netherlands, Thorsgaard said.

Medtronic, the largest maker of implantable cardioverter defibrillators that treat too-rapid heartbeats, has suffered from a slowdown in demand for the life-saving devices following the mid-2005 Guidant Corp recalls. In October, Medtronic halted sales of its Sprint Fidelis lead, a wire linking the heart to an ICD, after five patients died possibly because their leads had fractured.

Last year, the company eliminated a total of 900 jobs in its cardiac rhythm management, cardiovascular, and Physio-Control external defibrillator businesses.

The cardiovascular division includes the endovascular business plus coronary and peripheral stents to treat clogged arteries, heart valve repair and replacement products, and surgical instruments used in open heart and bypass surgeries.
<<

[DewDiligence]

Abbott to Cut 1,000 Jobs

http://blogs.wsj.com/health/2008/08/21/layoffs-update-abbott-to-cut-1000-jobs

›August 21, 2008, 3:29 pm
by Jacob Goldstein

Abbott Labs punctuated the August doldrums today with this SEC filing describing a plan to “streamline global manufacturing operations.” That turns out to be code for closing a manufacturing plant and cutting jobs, Dow Jones Newswires reports.

The plant, in South Pasadena, Calif., is part of the company’s diagnostics business and will close some time in the next couple years. Other diagnostics manufacturing jobs will be affected in Santa Clara, Calif., and Lake County, Ill., a company spokeswoman told Dow Jones. In all, the company plans to cut about 1,000 in its diagnostics business.

This move puts Abbott in good company: Since last summer, Merck, Wyeth, Bristol-Myers Squibb, Johnson & Johnson and Amgen have all announced plans to cut jobs.

Abbott nearly sold its core diagnostics business to GE for $8 billion, but the deal fell through in July of last year. At the time, we noted that the company had received an FDA warning letter a few months earlier about problems in a factory that made tests to analyze blood and urine.

Abbott now plans to shift some operations, including manufacturing drug and urine tests, to Europe, in order to be “closer to a large base of customers,” a spokeswoman told Dow Jones.

The company will take charges of $370 million to put the plan into place, and expects to save $150 million a year once the changes are made.‹

[DewDiligence]

PFE – I thought this shocking headline was fake on first glance.

http://online.wsj.com/article/SB122273156729088223.html

›Pfizer to Abandon Heart-Drug Development

SEPTEMBER 30, 2008
By SHIRLEY S. WANG and JOANN S. LUBLIN

In a striking shift, Pfizer Inc. will abandon efforts to develop medicines for heart disease, as part of a broad research reshuffling it plans to announce Tuesday.

Pfizer will be leaving a field that includes its cholesterol-lowering drug Lipitor and other medicines that fueled the company's dominance of the pharmaceutical industry for more than a decade.

The beleaguered New York pharmaceutical giant is also expected to announce it is exiting therapies for obesity and bone health, to focus on more-profitable areas, such as cancer.

The move is part of an ongoing plan to restructure into business units responsible for their own profits and losses. Job cuts and a reduction in research and development spending -- which at $8.1 billion last year was the highest in the industry -- are expected. Pfizer executives declined to disclose the size of any expense cuts.

"We still see the programs that we're stopping as having value," said Martin Mackay, Pfizer's head of research and development. "They're just not as valuable as other programs, like Alzheimer's or oncology." The company will seek partners to develop some of the compounds it is jettisoning.

The mega-blockbusters Lipitor, the world's top selling drug with sales of $12.7 billion in 2007, and Norvasc, a blood pressure medicine with $4.7 billion in sales in 2006 before losing patent protection last year, made Pfizer in the mid-1990s the king of cardiovascular drugs.

The company had banked on another cholesterol-lowering drug, called torcetrapib, to provide a new source of growth. But that drug failed in a major study in late 2006.

The company will continue to develop heart medicines in late-stage testing, including an anti-clotting drug being co-developing with Bristol-Myers Squibb Co. [The drug referred to here is Apixaban, which has suffered some recent setbacks: #msg-32382362.]

Pfizer sees decentralized operations as boosting pipeline prospects and efficiency. "We're running the company with a real sense of urgency and accountability," said Chief Executive Officer Jeffrey Kindler.

Drastic job cuts aren't imminent, according to two people familiar with the company's plans.‹

[DewDiligence]

Glaxo to Cut R&D Jobs

[Layoffs per se in Big Pharma are hardly newsworthy; however, it *is* notable that these layoffs have spread from their original targets in sales and marketing and now include R&D. With each successive R&D layoff, Big Pharma is implicitly saying that it will rely more and more on in-licensing.]

http://online.wsj.com/article/SB122278989273290641.html

›OCTOBER 1, 2008
By JEANNE WHALEN

Drug maker GlaxoSmithKline PLC Tuesday said it plans to cut as many as 850 jobs in research and development in the U.S. and Britain, the latest cuts in an industry grappling with declining profits and productivity.

The cuts, about 6% of total R&D staff, would come on top of the 350 R&D jobs Glaxo said it was eliminating earlier this year, said Claire Brough, a spokeswoman for the Brentford, U.K., company. The exact number of job cuts will be determined after consultations with employees and unions.

The world's second-biggest drug maker by sales after Pfizer Inc. said that the cuts were necessary "to ensure that we can invest in key areas of future growth and evolve our business to compete effectively in what is a rapidly changing and challenging environment for pharmaceutical companies."

The drug industry has been cutting staff and costs in response to declining profits. Pfizer this week disclosed it is abandoning research into heart disease and other areas as part of a restructuring that will involve job cuts. Most big drug companies have announced layoffs over the past few years. [I think the word, “most” can be replaced by “virtually all.”]

R&D staffs have come under particular pressure because they haven't produced enough new products to keep sales growing. Generic-drug competition is eating into profits, and companies haven't launched enough new brand-name medicines to compensate.

As they cut their research staffs, drug companies are pouring investments into biotech companies, which have produced some of the industry's most successful medicines in recent years.

Andrew Witty, who took over as chief executive officer of Glaxo in May, has pledged to increase Glaxo's investment in outside research. He has said that half of Glaxo's drugs in development eventually could come from partnerships with outside firms.

Mr. Witty has been scrutinizing Glaxo's own research team and making changes. Among other moves, he has set up a board that includes outside experts, such as venture capitalists, to review R&D projects and decide which to fund. He has also shut down some areas of research and focused Glaxo on eight disease areas. Glaxo has dedicated teams, known as Centres of Excellence for Drug Discovery, or CEDDs, for each disease area. The changes have caused some upheaval, with at least three CEDD leaders leaving the company in recent months.‹

[DewDiligence]

Sanofi Plans Job Cuts in France

[I didn’t think this was possible—well, maybe it isn’t.]

http://online.wsj.com/article/SB122287438653094395.html

›By DAVID GAUTHIER-VILLARS and JEANNE WHALEN
OCTOBER 2, 2008

A group of French unions said they expect French drug maker Sanofi-Aventis SA to announce Thursday that it will cut roughly 800 sales jobs in France, the unions said in a statement Wednesday.

Such a cut would represent about a third of Sanofi's sales force in France, Philippe Guerin-Petrement, a delegate with the Force Ouvriere union, said in an interview. Some of the drug-sales representatives plan to stage demonstrations Thursday in various French cities, he said. A Sanofi spokesman declined to comment. Like other big drug companies, Paris-based Sanofi has been cutting jobs for several years amid tough times in the drug industry.

In February, Sanofi said it had cut the size of its global sales force by 5% over the previous two years, to 35,629 representatives. The company said it cut 2,900 sales jobs in the U.S. and Europe during that period, with the U.S. sales force alone declining by about 18% to 7,800 people.‹

[DewDiligence]

PRX Lays Off 190, Slashes R&D:

http://biz.yahoo.com/prnews/081014/ny38735.html

[genisi]

AstraZeneca to cut 1,400 jobs in packaging revamp

http://www.reuters.com/article/idUSLK70433520081120

Nov 20 (Reuters) - Anglo-Swedish drugmaker AstraZeneca (AZN.L) said on Thursday it would cut 1,400 jobs in the coming years as it revamped its packaging operations. The company said in a statement released in Swedish it would close facilities in Porrino, Spain, Destelbergen, Belgium and in Umea, in northern Sweden. Jobs would also be cut at its operations in Macclesfield, Britain, and Sodertalje, Sweden.

The staff cuts would be carried out through to 2013 after local negotiations, AstraZeneca said.

Its forecast of restructuring costs remained unchanged for 2008 and would be updated in connection with the group's full-year results were presented in January, it added.

[DewDiligence]

Vical Announces Layoff and Restructuring

[The stock was off 5% today and traded near an all-time low.]

http://biz.yahoo.com/prnews/081121/laf511.html

›Friday November 21, 6:30 am ET

SAN DIEGO, Nov. 21 /PRNewswire-FirstCall/ -- Vical Incorporated (Nasdaq: VICL ) today announced a strategic restructuring including a staff reduction of 29 employees, approximately 20% of the company's total workforce, and accelerated closure of a research facility. Following the restructuring, the company will have approximately 120 employees and expects to reduce future net losses and cash burn by approximately $4 million annually.

The restructuring is designed to preserve capital and focus the company's efforts on its most advanced product development programs: its Allovectin- 7® immunotherapeutic currently in a pivotal Phase 3 trial in patients with advanced metastatic melanoma, and its DNA vaccine for cytomegalovirus (CMV), currently in a Phase 2 trial in stem cell transplant recipients. The company is exploring partnering opportunities for the congenital disease application of its CMV vaccine and for its pandemic influenza DNA vaccines.

"Vical is fortunate to have sufficient capital for its near-term needs," said Vijay Samant, Vical's President and Chief Executive Officer, "but in the current economic climate, we needed to reduce spending and focus our efforts on advancing our two late-stage product development programs toward the achievement of key milestones. We regret the impact this unavoidable decision will have on our departing employees, whose past dedication and efforts have supported Vical's significant progress. We wish them and their families all the best through this difficult period of transition."

The company expects to incur restructuring charges of approximately $0.8 million in the fourth quarter of 2008, associated with personnel-related termination costs, and another $0.5 million in the first quarter of 2009 related to the facility closure. The company will provide additional details on the impact of this restructuring with the issuance of its 2008 year-end results and 2009 financial guidance in February 2009.

About Vical

Vical researches and develops biopharmaceutical products based on its patented DNA delivery technologies for the prevention and treatment of serious or life-threatening diseases. Potential applications of the company's DNA delivery technology include DNA immunotherapeutics for cancer, in which the expressed protein is an immune system stimulant; DNA vaccines for infectious diseases, in which the expressed protein is an immunogen; and cardiovascular therapies, in which the expressed protein is an angiogenic growth factor. The company is developing certain infectious disease vaccines and cancer therapeutics internally. In addition, the company collaborates with major pharmaceutical companies and biotechnology companies that give it access to complementary technologies or greater resources. These strategic partnerships provide the company with mutually beneficial opportunities to expand its product pipeline and serve significant unmet medical needs. Additional information on Vical is available at http://www.vical.com.‹

[DewDiligence]

Despite Cuts, Big Pharma’s Salesforces Are Still Overstaffed

http://www.burrillreport.com/article-despite_cuts_big_pharma_says_it%E2%80%99s_still_overstaffed.html

›February 17, 2012
The Burrill Report

In 2011, Big Pharma companies made deep cuts to their salesforces as they contended with a loss of patent protection on some of the top-selling drugs in the industry. Nevertheless, a new study finds that half of these companies say they are still overstaffed, compared to just 5 percent of life sciences companies overall.

The study from the global consulting firm Hay Group says Big Pharma companies plan to cut salesforces by 6 to 15 percent over the coming year. The survey includes responses from more than 30 pharmaceutical, specialty, and biotechnology companies representing a broad cross-section of the U.S. pharmaceutical industry with data collected for about 90 sales, marketing, and medical affairs positions.

The planned cuts reflect the dramatic change in the industry in both the mix of products the drive revenue for these companies, as well as how purchasing decisions are made. It also reflects the continued challenges these companies will experience in transitioning away from a world that had been defined by the one-size-fits-all blockbuster to a world where value is increasingly becoming a determinant of purchasing decisions.

“When it comes to staffing and go-to-market models, the gap between Big Pharma and other players in the life sciences arena is considerable, and it continues to grow,” says Matt Gurin, Hay Group’s U.S. reward practice leader for life sciences.

Gurin says pharmaceutical companies have been reluctant to alter sales models and strategies because they have been historically successful. “Given the magnitude of change in both the competitive and regulatory landscapes, it is not surprising, perhaps, that many commercial organizations are proceeding cautiously since it’s a strong prescription to both shrink and change at the same time,” he says.

The study also found that prescription volume is a key concern for sales organizations with 55 percent of the respondents saying it was a primary factor. Revenue attainment and market share both followed at 21 percent.

But despite the significant changes under way, companies are not spending more on training. Hay Group found training budgets at most companies remained stagnant at nearly 60 percent on 2011. A total of 27 percent of companies increased their spending on training, up from 13 percent in 2010.

“In order to excel in the evolving life sciences market,” says Gurin, “successful organizations will be required to be ambidextrous, to rationalize both the size and activities of their commercial organizations to deliver value, not just revenue.”‹

[DewDiligence]

It hasn’t let up—Big Pharma slashed 144K jobs in past 5 years:

http://www.firstwordpharma.com/node/1144083#axzz2h26mcBj6

I presume that’s a net rather than gross figure.