Roche Restructuring - Reverberations for Reps and R&D

09/03/2010

Roche Restructuring - Reverberations for Reps and R&D

Roche announced, exemplified by PharmaGossip post below, its intention to cut jobs in 2011 and 2012. Reportedly the action can save the company up to $1.9 B and would boost the EPS forecast by as much as 10 percent. The cost cutting program has been dubbed a "Group-wide Operational Excellence Initiative".

PharmaGossip: Roche launches restructuring plan | Swisster.

Cuts are expected to be borne largely by US sales force representatives and the US R&D group according to a report in Reuters via the Pharmalot blog. In a letter to employees, Roche CEO Severin Schwan says cuts are necessitated by "mounting pressures to curb healthcare costs -- especially in the US and Europe -- together with recent developments in late-stage projects in the Roche pipeline"

Roche has seen a series of set backs in its pipeline the past few months. It's seen delays in its projected blockbuster Type 2 diabetes drug taspoglutide - delaying its launch by 18 months. It suspended trials of ocrelizumab for rheumatoid arthritis. Last week, the FDA sent it a "refuse to file" letter for accelerated review of T-DM1 for the treatment of breast cancer. Now, the FDA also has Avastin under review for a breast cancer indication that could be rescinded. See Fierce Biotech for more.

Despite all this, Schwan insists the company is launching this program from "a position of strength."Roche remains confident that it will see double-digit earnings per share growth at constant exchange rates in 2010 in line with previous guidance.