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Merck & BMS Continue Streamlining
  Merck Will Cut About 15%
Of Its U.S. Sales Force

May 6, 2008; Page B3
Merck & Co. will cut 1,200 sales positions amid slowing use of two cholesterol drugs and regulators' rejection of a promising medicine last week, reflecting pressures that have cost some 42,000 jobs industrywide since the beginning of last year.
The Whitehouse Station, N.J., company, one of the few drug giants that had weathered difficult times remarkably well, said late Monday that it would cut about 15% of its U.S. sales representatives. The industry has struggled amid competition from generic drugs, declining insurance reimbursements and unfruitful scientific research, but until recently Merck had seemed immune to those ills.
Other drug companies already have cut back on the hordes of sales reps they once sent to doctors' offices, after complaints about excessive promotion and concerns that a full-court press doesn't always translate into more-robust sales. Pfizer Inc. cut 2,000 U.S. sales reps in late 2006, while Wyeth cut 1,200 this past March.
As the industry struggles, it isn't just sales forces that are in jeopardy. Last year, Johnson & Johnson laid off 4,800 employees, Amgen Inc. cut 2,600, AstraZeneca PLC laid off 7,600 and Bristol-Myers Squibb Co. slashed 4,300 positions.
At Merck, Chief Executive Richard Clark's turnaround plan has centered on containing costs, and has proven a hit with Wall Street. The company's productive labs churned out eight new medicines in the past two years.
But the company has fallen on harder times of late. Merck's stock has fallen 33% since the drug maker disclosed unfavorable results from a study of Vytorin, a cholesterol drug it sells with Schering-Plough Corp. that brought in $5.2 billion in 2007. At a conference of heart doctors in March, a panel of experts called on their peers to curtail use of the drug.
Merck said sales of Vytorin and its sister drug Zetia climbed 6% to $1.2 billion from the first quarter of last year, a much slower rate of growth than in the past. Schering-Plough last month cut 5,500 employees, or 10% of its work force, to deal with the anticipated financial pressures.
Merck is also wrestling with damage from the Food and Drug Administration's rejection last week of one of the most promising drugs in its development pipeline, a cholesterol medicine to be called Cordaptive that one industry analyst had predicted would generate $2 billion of annual sales. While Merck said it would continue discussions with regulators about the product's future, its shares slid $4.30, or 10%, to $37.14 this past Tuesday. The stock Monday was down 39 cents to $38.98 as of 4 p.m. New York Stock Exchange composite trading before the layoffs were announced.
The company described the sales-force cuts as an acceleration of the restructuring plan already under way. Merck has now eliminated 9,300 positions of various types since Mr. Clark announced his revamp plan in 2005. Merck had already shed 400 sales employees in advance of the osteoporosis medicine Fosamax losing patent protection in February. Merck said sales support for Vytorin and Zetia wouldn't be affected.
The company Monday said the latest 1,200 employees to lose their jobs will be notified by the end of the month and terminated by July.

Bristol-Myers to Sell
Unit for $4.1 Billion

May 3, 2008; Page A4
Bristol-Myers Squibb Co. has agreed to sell its ConvaTec unit to two private-equity firms for $4.1 billion.
The agreement to sell ConvaTec to U.S.-based Avista Capital Partners and European buyout firm Nordic Capital appears to complete Bristol-Myers's plan to shed a chunk of its nonpharmaceutical assets to concentrate on its main drug business. Convatec, based in Skillman, N.J., is a medical-technology business that manufactures wound-care and ostomy products.
In January, Bristol sold its medical-imaging unit to Avista for $525 million. And last week, also as part of its asset-sale plan, Bristol said it planned to file for an initial public offering of between 10% and 20% of its Mead Johnson Nutritionals unit.
Bristol-Myers plans to use proceeds from its asset sales to make modest-size acquisitions that beef up its drug research pipeline. The asset sales could also make Bristol-Myers, considered midsize by industry standards, a cheaper and more-tempting acquisition target.
The deal is also a positive signal for the credit markets, which have recently shown signs of recovery. A large group of banks led by J.P. Morgan Chase & Co. provided roughly $2 billion in funding for the deal, according to a person familiar with the situation. Other banks in the lending group include Royal Bank of Scotland Group PLC, Swedbank AB and Mizuho Financial Group.
Avista, started in 2005, is run by Thompson Dean, who for a decade headed DLJ Merchant Banking Partners, the private-equity arm at Donaldson Lufkin & Jenrette, later acquired by Credit Suisse. Nordic Capital is a Scandinavian-based buyout firm that has joined with Avista before; the two buyout shops co-own Nycomed, a Denmark-based pharmaceutical business.
More than 50 potential buyers were shown the ConvaTec deal by Morgan Stanley & Co. and Citigroup Inc., which handled the ConvaTec sale for Bristol. Final-round bidders included 3M Corp. and private-equity shop Apax Partners.
Bear Stearns Cos. advised Avista and Nordic.
The deal is expected to close in the third quarter.
To Save Itself, Big Pharma Adds Strategy Executives
April 14, 2008, 9:17 am
Posted by Jacob Goldstein
Big Pharma has been accused of being a bureaucratic behemoth that's too slow to adapt to the scientific and market realities of the 21st century. Several big industry players are responding by ... wait for it ... adding a new layer of high-level executives, the WSJ reports.
J&J, not often accused of running too lean, added an entire "Office of Strategy and Growth" in HQ last year. The big thinkers are headed by Nicholas Valeriani, a VP who used to run the company's devices and diagnostics unit. The group's supposed to look for new health-business opportunities, such as information technology. Valeriani wasn't available to talk to the WSJ about his work, and the company hasn't yet announced specific changes resulting from his labor.
Earlier this year, Bristol-Myers Squibb named John Celentano to the new position of "senior vice president, strategy and productivity transformation." If you think that title is a mouthful, consider that Celentano is in charge of the company's "productivity transformation initiative," a euphemism for the project that includes cutting thousands of jobs and closing half of the company's manufacturing plants. But he's also responsible for M&A, which he told the WSJ is likely to include licensing deals and modest acquisitions.
Around the same time Celentano landed his new job, William Ringo stepped into a similar sounding new position at Pfizer: "senior vice president of strategy and business development." Ringo, who ran the biotech shop Abgenix before Amgen bought the company, will be "guiding Pfizer's overall strategic planning and business development activities," the company said.
And in January, Merck hired Caroline Dorsa for the new job of "senior vice president of global human health strategy and integration." A company spokeswoman said the new position was needed to oversee strategy initiatives at Merck's relatively new global human-health unit.
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