Sanofi-Aventis to eliminate 1,700 jobs in US drug sales, administration to cut costs

By Linda A. Johnson, AP
Friday, October 8, 2010

Sanofi-Aventis to lay off 1,700 US employees

TRENTON, N.J. — Sanofi-Aventis SA, the world’s fourth-biggest drugmaker, said Friday it is eliminating 1,700 jobs in its U.S. pharmaceutical business in a restructuring triggered by growing generic competition and other factors.

The news comes as Sanofi’s struggle to buy U.S. biotech firm Genzyme Corp. drags on.

The layoffs amount to about 25 percent of the workers in the company’s U.S. pharmaceutical business, and will primarily hit sales representatives around the country and administrative staff at Sanofi’s American headquarters in Bridgewater, N.J.

About 1,400 sales staff will be laid off, as well as about 300 staff in various administrative jobs, Sanofi-Aventis spokesman Jack Cox said.

“Barring any unforeseen events, we do believe the changes we’re making now will make us the right size (in the U.S.) for our product portfolio through 2013, when we expect to return to growth,” Cox said.

Three of Sanofi’s top four products — blockbuster anticlotting medicines Lovenox and Plavix and cancer drug Taxotere — have new generic competition or will get it soon, jeopardizing just more than $10 billion of the company’s $40 billion in annual sales.

The cuts announced Friday amount to 1.6 percent of the 105,000 employees worldwide and about 13 percent of Sanofi’s entire U.S. work force of 13,000. That includes U.S. workers in research and development, manufacturing, the Sanofi-Pasteur vaccines business and the consumer products subsidiary Chattem.

Decisions on which employees will go are to be completed by mid-December, with the cuts being completed throughout 2011 according to transition needs, Cox said.

“Given the serious challenges facing our organization and the health care industry, it is important to act decisively now so that our organization has greater stability moving forward and that our resources are allocated to our strategic growth priorities,” Gregory Irace, president and chief executive of Sanofi’s U.S. and Canadian pharmaceutical operations, said in a statement.

He announced the layoffs to employees Friday morning during a meeting webcast to pharmaceutical employees around the country.

The company said the move will allow it to focus people and resources on key areas for the American pharmaceutical business — medicines to treat diabetes, cancer and irregular heart beat that can lead to stroke and death.

Sanofi has had other layoffs or restructurings in the last few years, including reductions in its U.S. sales force June and last November, and downsizing of a research and development plant in Great Valley, Pa., Cox said. The company is closing a manufacturing plant in Kansas City in phases through 2012, eliminating about 300 jobs there.

Also in June, Paris-based Sanofi said it was offering voluntary buyouts to an unspecified number of employees in France, plus closing four research sites and possibly selling a fifth one there. Those sites employed about 650 people at the time. The company said it was not planning any layoffs there.

Restructurings have become routine in the pharmaceutical industry. They are driven primarily by two factors: the expiration of patents on numerous multibillion-dollar drugs launched during the industry’s golden era in the 1990s and the companies’ failure to develop enough new big sellers to replace those lost revenues.

Mergers of pharmaceutical companies, as well as their acquisitions of smaller consumer health and biotech companies, in recent years have been aimed at boosting current and future revenues. Those deals are resulting in additional restructuring programs and job cuts.

Sanofi has been attempting such a deal since late July, when it offered $18.5 billion, or $69 a share, for Genzyme, of Cambridge, Mass., which makes some lucrative drugs for rare genetic disorders and has other promising drugs in testing.

Genzyme’s board has turned down the offer as too low three times, most recently late Thursday. Three days before that, Sanofi initiated a hostile takeover attempt and gave Genzyme stockholders until Dec. 10 to tender their shares.

In a filing with the U.S. Securities and Exchange Commission, Genzyme said that during a Sept. 20 meeting of the companies’ chief executives, Sanofi CEO Chris Viehbacher “proposed the parties agree to a price range of from $69 per share to $80 per share.”

Sanofi spokesman Jean-Marc Podvin denied that on Friday.

“We offered no price range, and Genzyme continues to refuse to engage with us on valuation” of the company, Podvin told The Associated Press.

He said he could not comment on what Sanofi’s next step will be, but said its tender offer remains open.

In afternoon trading in New York, Sanofi-Aventis shares were up 7 cents at $34.11, while Genzyme shares were up 47 cents at $72.83.

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