French drugmaker Sanofi SA said Wednesday that it's reorganizing research operations in the U.S. and planning to trim its sales force for the second time in barely a year as it aims to boost efficiency.
The sales job cuts, which are to start with voluntary buyout offers, are due to generic competition eroding sales of some existing drugs and other drugs faring poorly in testing for some uses, which limits sales potential.
The research reorganization is part of CEO Chris Viehbacher's long-term plan to restructure early drug testing and later-stage patient testing around hubs in different countries, including France and Germany.
Company employees were notified at meetings Wednesday morning. A company spokesman said Sanofi, the world's fourth-largest drugmaker by revenue, is still deciding how many jobs will be eliminated. He said research workers will get details about how they'll be affected in January and sales staff will in December.
"Both initiatives are part of Sanofi's three-pronged strategy of increasing innovation in research and development, pursuing external growth opportunities and adapting the organization for future challenges and opportunity," Sanofi said in a statement.
In afternoon trading, Sanofi's U.S.-listed shares added 27 cents to $34.28.
Paris-based Sanofi, the maker of blockbuster blood thinner Plavix, will be shifting some research jobs from central New Jersey to its new hub for early-stage drug research in the Boston area. Sanofi already has sizeable operations there, including about 5,000 employees, mostly at biotech drugmaker Genzyme Corp.
Research for Sanofi's cancer and vaccine businesses also are in the Boston area. Genzyme, which Sanofi bought last year for $20.1 billion to expand into biologic drugs, specializes in tough-to-make injected drugs for rare genetic diseases such as enzyme disorder Gaucher's disease.
An undetermined number of research jobs will be shifted to the Boston hub from one of Sanofi's two sites in Bridgewater, N.J. That multibuilding research site now is set to close in the fourth quarter of 2012, but Bridgewater will remain the company's headquarters for North America operations. Sanofi has about 18,000 employees in North America, including 3,000 in New Jersey, mostly in Bridgewater.
Later-stage testing in people will be run from Bridgewater, where the company will establish its new North America Development Center at the four-building site including the headquarters.
The company will establish a new global services division for North America in Bridgewater. It will provide consolidated support functions such as finance, purchasing, legal and communications for Sanofi's five businesses in the U.S.: Sanofi (prescription drugs), Sanofi Pasteur (vaccines), Genzyme (biologic drugs), Chattem (consumer health products) and Merial (veterinary medicine).
Meanwhile, Sanofi plans a new round of cuts to its U.S. sales force, focused on salespeople who promote cardiovascular and cancer drugs to doctors. Sanofi plans to offer buyouts to those salespeople initially, then will try to shift others into vacant positions before resorting to layoffs. The company now has about 4,500 salespeople working for Sanofi and Sanofi Pasteur.
Sanofi said U.S. developments in the last year required it to reassess the size and structure of its sales force, including "Genzyme integration, the full impact of patent (expirations and) generic competition, regulatory and payor pressures, a depressed economy, deficit-reduction efforts and health care reform."
Sales of some other heart or cancer drugs either are declining due to generic competition _ including anti-clotting drug Lovenox and breast and prostate cancer drug Taxotere _ or face it soon. Plavix, the world's second-best-selling drug, gets generic competition here next May. Sanofi jointly markets Plavix with Bristol-Myers Squibb Co.
Other drugs have had research setbacks. Multaq, a drug sold for some patients with atrial fibrillation, fared poorly in a recent study testing it for another patient group. Iniparib failed in testing for some advanced breast cancer patients, but is in late-stage testing for lung cancer.
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