The Medical Technology Blog

“Operational Excellence” programme affects 6,000 jobs at Roche

Welcome back to the Medical Technology Blog, posts have been thin on the ground as i’ve been on holiday. Today’s post concerns the sad news that some major changes are happening at Roche, which will directly affect the workforce, please read on…

In response to mounting cost pressures in healthcare – particularly in the US and Europe – and to bigger hurdles for the approval and pricing of new medicines, Roche has started the “Operational Excellence” programme to change the way it spends its cash. A company focused on research-based healthcare in pharmaceuticals and diagnostics, Roche is hoping to generate savings of around SFr 1.8 billion in 2011, with forecast savings of SFr 2.4 billion in 2012 and beyond.

The Operational Excellence programme plans unfortunately include the reduction of Roche’s workforce, by about 4,800 employees worldwide – 6 per cent of the group’s employees – over the next two years. Another 800 jobs will be transferred to other Roche sites and 700 positions will be outsourced to other parties, making for a total combination of 6,300 affected employees. Roche has put aside SFr 2.7 billion to cover the cost of this restructuring for 2010 to 2012.

The most affected division for job losses will be Pharmaceuticals – mainly in the division’s worldwide sales and marketing organisation and manufacturing. Total Roche redundancies worldwide are expected to total 2,600 in these positions. Roche puts these job cuts mainly down to the setback of the company’s diabetes drug, taspoglutide, and structural adjustments the primary care sales organisations – mainly in the US and Europe. Also affected will be some Technical Operations activities, which will be reorganised in California, US; Mannheim, Germany; and other sites in the network, meaning the loss of 750 positions across this area. Roche is also looking for buyers for its Florence, SC and Boulder, CO sites, which would mean the loss of a further 600 jobs.

In line with the Operational Excellence ethic, Roche has also decided to pull the plug on some development activities – most from the US. Some, however, will be transferred to other Roche sites or third parties. Roughly 800 positions will be affected by this plan. Roche is further cutting certain activities in research and early development, including RNA interference research in Kulmbach, Germany; and in Nutley, NJ and Madison, WI. Plans include reorganising some internal functions, in order to free up resources for pipeline Phase II studies of new molecular entities; around 600 positions will be affected.

Roche’s Diagnostics division aims to consolidate three of its sites – a move that the company believes will “optimise seamless collaboration and cost structures in development and manufacturing”. This plan calls for the closure of the Graz, Austria site and transfer of developmental and manufacturing of blood gas diagnostics to Rotkreuz, Switzerland – home of Roche’s Professional Diagnostics division’s HQ.

In the Diabetes Care division, most activities will be based in Mannheim, Germany. The plan is to out-source manufacturing and close its Bugdorf, Switzerland site. Diagnostic chemical manufacturing and analytical services will be discontinued in Mannheim and transferred to Penzburg, Germany.

Redundancies are always an unfortunate side-effect of any company undertaking a restructuring plan, but Roche hopes to carry out its reduction in a “socially responsible” way, including informing the affected employees as soon as possible, and offering them assistance and support. Despite the changing healthcare market, Roche believes it is approaching this project from a position of strength. The company’s exposure to patent expiries over the next few years is comparatively low, and the group has 14 product groups that each generate over SFr 1 billion per year. The company’s late-stage development portfolio includes six drug candidates that are effective in specific patient populations, which could help advance personalised healthcare. Roche also has other important drug candidates in late-stage development for cancer, central nervous system diseases and metabolic disorders.

Thanks to Sophie Bracken for this article, Sophie is the editor of Espicom’s excellent business news service Drug Delivery Insight which tracks the important commercial and technology developments that are shaping the drug delivery industry.

Espicom Business Intelligence

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