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Bristol-Myers Plans Additional Layoffs
 
 
  "There's no longer any doubt, in case anyone was wondering, that this is the worst stretch for research employment at the big pharmaceutical companies in at least twenty years (to my certain knowledge) and very likely much longer than that, from what longer-serving colleagues tell me. Frankly, I'm not sure we've ever seen anything quite like this - which makes further prediction impossible. "
 
WSJ -Dec 16 2008
By SHIRLEY S. WANG
 
Bristol-Myers Squibb Co. said it will cut another 10% of its work force on top of a 10% reduction already under way, bringing its planned reductions to about 8,000 employees by 2010.
 
The New York-based drug maker said it expects to have cut 800 positions as part of the latest round of cuts by the end of the month. The company is continuing with its previous moves announced in July to eliminate 4,300 jobs.
 
After announcing the sale of a wound-care unit with 3,400 workers earlier this year, Bristol-Myers's world-wide work force numbered 37,000 in November.
 
Bristol-Myers, facing pressure like others in the drug industry from looming patent expirations and difficulty in finding new products, is seeking to reduce its costs by $2.5 billion by 2012.
 
The latest round of cuts will be broad and global, including researchers and sales employees, the company said. The cuts are "designed to help us address the challenges and uncertainties our company is facing in the short and long term," spokeswoman Sonia Choi said.
 
Bristol-Myers had a strong third quarter, thanks to solid sales of anticlotting agent Plavix, psychiatric drug Abilify and the cancer drug Erbitux, which it co-markets with ImClone Systems Inc. Plavix, co-marketed with Sanofi-Aventis, has brought the company more than $4 billion in sales this year but could face generic competition in the U.S. around 2011.
 
The company has decided to narrow the focus of its drug-development efforts and to focus on its core pharmaceutical business, selling its wound-care unit, Convatec, in May. It also plans to offer a partial initial public offering of its nutritionals business, Mead Johnson, in the first half of 2009.
 
Bristol failed in its attempt to buy ImClone earlier this fall. Instead, ImClone was acquired by Eli Lilly & Co., depriving Bristol of full ownership of Erbitux and other cancer compounds ImClone is developing. Last week, Bristol announced a $240 million partnership with Exelixis Inc. to co-develop cancer drugs.
 
In 4 p.m. composite trading on the New York Stock Exchange Tuesday, Bristol-Myers shares were unchanged at $22.50.
 

Merck Cuts Another 7,200 Jobs
WSJ Oct 22 2008 Posted by Jacob Goldstein
 
Job CutsMerck just finished cutting more than 10,000 jobs. Now the company says it's about to cut another 7,200 positions, which is more than 10% of its remaining work force.
 
The cuts will affect 6,800 active employees (another 400 vacancies will be left unfilled). They'll be spread throughout the company and around the world:
 
- The number of senior and mid-level executives will be cut by 25%.
- Forty percent of the cuts will be in the U.S.
- By the end of next year, the company will close research sites in Japan, Italy and Seattle, and rely more heavily on research conducted outside the company.
- "Non-core"manufacturing will be outsourced.
- The company "will accelerate the rollout of a new, more customer-centric selling model."That suggests more job cuts could be in store for sales reps.
 
The news came this morning as Merck reported third-quarter earnings. The company took a charge of $757 million during the quarter connected with its restructuring efforts. It expects total restructuring costs through 2011 to come in between $1.6 billion and $2 billion. Merck expects the program to save the company $3.8 billion to $4.2 billion between now and 2013..
 

Layoffs Update: Abbott to Cut 1,000 Jobs
 
WSJ, August 21, 2008, , Posted by Jacob Goldstein
 
AbbottAbbott 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.
 

Glaxo Axing Drug Researchers
 
WSJ September 30, 2008, Posted by Jeanne Whalen
 
drug research layoffsGlaxoSmithKline told workers today that as many 850 jobs in R&D may be cut as the drugmaker slashes costs.
 
The cuts, representing 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, a Glaxo spokeswoman told the Health Blog. The company has to talk with employees and unions before disclosing exactly how many jobs will be lost.
 
"Following a recent review of business operations, we have started consultation on proposals which could impact 850 roles within R&D in the UK and the US,"the company said in an emailed statement. "It has been difficult to arrive at these proposals, but we believe these changes are necessary as part of GSK's longer-term strategy 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.h
 
"We must continue to reshape our R&D operations to take advantage of new scientific opportunities and further improve GSK's productivity,"the statement said. "Implementation of these proposals will be subject to consultation, according to legal requirements and GSK custom and practice."
 

BMS reveals plans to trim the fat
 
By Kirsty Barnes, 06-Dec-2007
 
http://www.drugresearcher.com/
 
Bristol-Myers Squibb (BMS) has finally detailed its plans to trim the fat and save cash, months after first revealing that big changes would be on the cards.
 
Amidst sweeping restructuring plans, around 4,300 positions are facing the chop between now and 2010 - equivalent to 10 per cent of the drug behemoth's global workforce - and 1,300 employees have already received their marching orders.
 
The firm's back-office operations, finance, information technology and human resources departments will be hit the hardest by the intended job losses, BMS indicated.
 
Additionally, however, the firm is also planning to mothball over half of its 27 manufacturing facilities during the same period.
 
The usual move of outsourcing production to cheaper offshore locations such as Asia and Latin America will be a likely scenario, benefiting those on the receiving end, although, even these regions are still at risk of being negatively affected by the restructure - it has already been announced that a BMS site in one such low-cost location will be one of the first to close its doors.
 
The firm said that Bristol Laboratories International Sociedad Anonima, a secondary packaging facility in Colon, Panama, will cease operations by the middle of 2008. Products at the site will be transferred to "other facilities" and ninety-eight positions will be affected.
 
"Bristol-Myers Squibb is continuing to identify ways to operate more efficiently and reduce our cost base", said Carlo de Notaristefani, president of Technical Operations.
 
"Focusing our manufacturing, packaging and distribution operations on fewer, specialized sites is one way we can bring greater efficiencies to our network," he said.
 
At the end of the restructuring tunnel, BMS is expecting to be left with a $1.5bn pot of gold, in addition to a total of around $600m already anticipated by the end of 2008 through already-announced initiatives.
 
The firm's cash saving plans have been prompted by soaring drug development costs and increasing generic competition that are increasingly becoming a squeeze on its financials. The future scenario is set to worsen - BMS' number one drug Plavix will lose patent exclusivity in 2012, leaving the firm exposed to a potential $3bn/year revenue erosion.
 
However, BMS is by no means alone in its financial vulnerability or its axe-wielding activities. This year several of its big pharma peers have also announced changes to the face of their business to continue to compete in a fast-changing industry that continues to exert pressure on company purse-strings. AstraZeneca, GlaxoSmithKline, Pfizer, Merck & Co., Roche, Bayer and Abbott have all announced their own restructuring programmes.
 
Meanwhile, its not all cut backs at BMS. In an earlier conference call, CEO James Cornelius said: "The challenge is to reduce costs while at the same time continue in investing in growth areas".
 
"With a promising R&D pipeline, we plan to invest further in R&D and the business including specialty medicines and biologics where we see tremendous growth potential."
 
Puerto Rico is one such region benefiting from investment in this area.
 

Why a Pfizer Takeover of Bristol-Myers Squibb Seems Unlikely
 
By Jim Edwards
 
November 29th, 2008
 
Deutsche Bank analyst Barbara Ryan left pharma pholks with an interesting wishbone to chew on prior to Thanksgiving - the notion that large pharma was overdue for consolidation and that Pfizer ought to consider finally merging with Bristol-Myers Squibb. It's not a new idea, of course. But is a Pfizer takeover of BMS realistic? The answer is that Ryan's note may be all stuffing and no meat.
 
Ryan's logic is based on two facts: That both BMS and Pfizer are facing large patent cliffs around 2010, and of all the companies in a position to acquire, only Pfizer has the scale and the cash to subsume BMS.
 
Let's take the patent cliff problem first. BMS will lose Plavix and Pfizer will lose Lipitor, brands which are both those companies' biggest sellers. Combining the companies essentially makes that hole twice the size, twice as difficult to fill, with twice the needed level of duplication cuts to produce one-time efficiencies. The stocks of both companies may be better off left alone. BMS and Pfizer are already working together to fill that hole with a new anticoagulant, apixaban. But results from apixaban have been mixed:
 
Bristol-Myers Squibb and its development partner Pfizer announced in August that the primary endpoint was not met in a Phase III study of apixaban - a novel anticoagulant - for prevention of venous thromboembolism (VTE) in patients undergoing total knee replacement.
 
Pfizer may have a very clear idea of whether that drug is worth paying the BMS acquisition price - and Pfizer's lack of active interest in BMS may also be an indicator. So on the whole, it is difficult to see how combining the two companies will make corporate strategy for the takeover management any easier.
 
Now look at the cash. It is true that Pfizer is cash-rich. So is BMS. The latter just received $1 billion from its stake of the Eli lilly-ImClone buyout, and it is about to float a minority portion of Mead Nutritionals which will also bring it a large lump of one-time cash. As a takeover target, this makes BMS cheaper for an acquirer because the buyer gains the cash like a rebate on a used car.
 
But take a closer look at BMS's Q3 numbers. Absent the ImClone cash, BMS would have reported a reduction in earnings per share. Which raises the issue of whether it is wise to acquire a company that is temporarily cash rich if you know that its core business is in decline.
 
So the two stools of Ryan's argument are wobblier than they first appear. The third element is whether Pfizer is in acquisition mode. As BNET readers know, CEO Jeffrey Kindler has given every sign that he is not. Kindler has repeatedly passed on M&A deals. he has made small deals with small companies. Most of his attention is focused on pruning the more useless parts of his business (like Pfizer's obesity drug). And look what Kindler actually said about M&A in his last conference call:
 
Roopesh Patel - UBS: Thank you. I have a couple of questions. First for Jeff, I'm wondering if you could please comment on the M&A outlook for Pfizer in light of what's occurred in the stock market in the past couple of months. Specifically, do you believe that acquisition opportunities have increased in the context of current valuation? And related to that, has your thinking on M&A for Pfizer changed over these past couple of months, if so, how?
 
Jeffrey Kindler - Chief Executive Officer: Okay, thank you Roopesh, good morning. So, let me start on business development. We've been clear that focused business development continue to be an important enabler of all of our growth strategies. And we've said before that we are open to all opportunities and we never say never. I can tell you that under Bill Ringo's leadership, we engage in a very robust and ongoing process to constantly look at all opportunities. And in that process we are always taking account of the very dynamic landscape and the challenges and the opportunities that the environment may create. But while the environment changes, the fundamentals don't change and the considerations I have outlined previously still apply to any deal, large or small. First, it has to have strategic value, the price must be right, it must... we must manage the disruption and risks to productivity. In short, it must create shareholder value, and none of that has changed, as the environment changes, we continue to observe and monitor very carefully and review those opportunities on a constant basis.
 
This doesn't sound like a man who is very impressed with what's on sale. Not convinced? Here's what he told the FT earlier this month:
 
We're facing a very significant loss of exclusivity in Lipitor at the end of 2011. We have a clear plan for positioning the company for strong, profitable growth after that. That plan consists of pursuing significant new opportunities for increased revenues starting with our internal pipeline, getting further growth out of our existing products, growing in the emerging markets, growing our business on off-patent products.
 
I think the key words there are "starting with our internal pipeline."Conclusion: Unless Kindler turns into Santa Claus over the holidays and suddenly decides he wants to give BMS shareholders a big bag of cash for Xmas, don't expect a BMS purchase anytime soon. Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools.
 
 
 
 
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