Cancer drug giant Roche could cut jobs
Swiss pharma giant Roche plans to review its business and will likely cut costs in response to rising pressures on healthcare reforms and recent setbacks on key drugs, the company announced on Friday.
In a statement, Roche hinted at the failures of certain drugs by confirming they will "allocate resources to treatments and diagnostic tools providing the highest medical value." As a result, the new implementation will "not simply a cost-reduction effort but is above all about pro-actively setting the right priorities to ensure a successful future.
"In view of mounting pressures to curb healthcare costs -- especially in the United States and Europe -- together with recent developments in late-stage projects in the Roche pipeline, this initiative aims to adapt cost structures and accelerate productivity improvements group-wide."
Roche is the largest player on cancer drugs, but investors are currently waiting for the FDA's approval on its newest blockbuster, the breast cancer drug Avastin.
Chief executive Severin Schwan confirmed the initiative has been launched "from a position of strength". He added that "by contrast with many of our competitors, we are only marginally affected by patent expiries. Furthermore, despite the recent setbacks, we have one of the strongest R&D product pipelines in the industry".
Roche wasn't forthcoming in divulging numbers or cost savings, and confirmed that more comprehensive details would be announced later this year, and likely implemented in 2011 and 2012.
"Cost savings could easily reach two billion Swiss francs ($1.9 billion) as of 2012 to 2013, which would boost our earnings per share forecast by some 10 percent," said Helvea analysts Odile Rundquist and Karl-Heinz Koch.
"They will mainly be looking at the primary sales force and R&D for cuts, which will be mostly in the United States and Europe," said Sarasin analysts David Kaegi.
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