Roche yesterday outlined its initiative to reshape its Pharmaceuticals Division for the future. The initiative aims to increase sales and reduce the division’s cost structure in order to improve the long-term profitability of the Pharmaceuticals Division. World-wide Roche expects job reductions in the range of 3000 over the next two to three years. Main sites affected are Palo Alto and Nutley, US, Welwyn, UK, and Basel, Switzerland. Roche is committed to conducting the restructuring process in a socially responsible manner and to keeping redundancies to a minimum.
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The following key areas are being addressed:
- Retain robust research commitment to ensure the long-term strength of Roche’s pipeline. Strong, in-house research activities will continue to focus on the seven therapeutic areas identified two years ago. Roche’s research activities will be concentrated on fewer sites to allow better utilization of available resources. This will give greater financial flexibility in particular to pursue additional external alliances. As a result, the research activities currently being undertaken in Welwyn, will be relocated to other research sites.
- Optimise development expenditure. Roche will streamline its global clinical development. Clinical development operations in Palo Alto, will be closed and projects transferred to other development sites. This will allow a better utilization of available resources.
- Adapt production to current requirements. Changes in Roche’s portfolio of existing products have resulted in significant over-capacity in various production sites. Therefore, Roche plans to reorganise its global manufacturing activities. This will impact production in Basel and Welwyn. As a result Roche plans to phase out manufacturing operations in the Welwyn site, and reduce chemical production in Basel.
- Optimise costs in administration. We will substantially reduce costs in the headquarters in Basel, and will continue to review all service functions.
- Strengthen sales by optimising existing product strategies and intensifying efforts to license in or acquire new products. Roche, while fully exploiting the potential of existing products will strengthen its current portfolio by licensing in new compounds or through product acquisitions and alliances. To take full advantage of opportunities for co-operation with other companies, Roche has brought together the activities of business development, licensing and alliances into a new strengthened and highly focused department.
- Country organizations. Reviews are being undertaken in all our affiliate companies in order to ensure that we drive our sales, resource our key products appropriately and operate more efficiently. A key emphasis will be on the US organisation. The restructuring will result in a strong marketing driven organisation with the goal to reduce costs significantly and focus the organisation on improving market performance.
In most cases, first actions will be initiated over the next weeks. Roche will immediately enter into various consultation processes with staff and their representatives, as required by local regulations. Some of the plans will be rolled-out in phases and it is Roche’s intention to implement all measures within the next two to three years with the aim to improve the operating profit margin of the Pharmaceuticals Division to 20-25% over the next two to three years.
Whilst the review is not yet complete Roche anticipates that the total number of job reductions will amount to approximately 3000 world-wide. The key sites involved will be Nutley, USA, (approximately 900), Palo Alto, USA, (approximately 200), Welwyn, UK, (approximately 700) and Basel (approximately 600). As in the past, Roche is committed to finding fair and locally tailored solutions for all employees affected and is committed to keeping redundancies to a minimum.
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By GlobalDataWilliam M. Burns, Head of the Pharmaceuticals Division: ‘Not only will we concentrate on optimising our cost structure, but we will also continue to work actively on strengthening our sales. We will continue to rely on internally generated growth, augmented, as in the past, by carefully targeted licensing agreements, alliances and product acquisitions.’
Franz B. Humer, CEO and Chairman of the Board of the Roche Group. ‘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.’
Headquartered in Basel, Switzerland, Roche is one of the world’s leading research-oriented healthcare groups in the fields of pharmaceuticals, diagnostics and vitamins. Roche’s products and services address prevention, diagnosis and treatment of diseases, thus enhancing well-being and quality of life. After spinning off its flavours and fragrances-business with 3000 employees under the name of Givaudan in the first half of 2000, the Roche Group employed approximately 65’000 people by the end of the year, whereof approximately 41’000 are in the Pharmaceuticals Division.
