HMR cuts 1700 jobs for $253m saving

14 January 1998 12:00  [Source: ICIS news]

LONDON (CNI)--Hoechst's pharmaceutical business Hoechst Marion Roussel (HMR) announced Wednesday a DM460m ($253m) cost-cutting programme which could see more than 1700 research and development job losses worldwide. Sales and administration jobs are also likely to go.

Around 600 or 37.5% of the 1600 "drug innovation and approval" (DIA) staff at the Frankfurt, Germany base could be affected, HMR said. Overall losses including the other DIA centres at Romainville, France and Kansas City and Bridgewater, New Jersey in the US will be "percentagewise more or less similar," a spokesman told CNI. HMR has 4600-4700 staff in "DIA" (formerly Research and Development) and 40 500 employees in total.

The spokesman said job cuts from sales and general administration "can't be excluded." Germany might escape these, but in other countries it would depend on whether the businesses could achieve their targets through DIA cuts alone.

The cuts announced Wednesday are part of HMR's plan to achieve a profit margin of 20% in its 1999 financial results. DIA costs as a percentage of sales are currently around 17%, compared to the industry average of 13-15%. The spokesman said HMR aimed to reduce these, as close as possible to 15%, by 1999. In that year it plans to apply for regulatory approval of two major new products: Arava (leflunomide) for rheumatoid arthritis and Actonel (risedronate) for osteoporosis.

HMR is aiming to cut drug development times from the current 9-15 years to between six and nine years. DIA head Frank Douglas said: "The value of our research, our pipeline and ultimately our commercial success depends on our ability to increase flexibility and productivity."

The spokesman said HMR's strategy involved a concentration on a number of high potential products, although the number of late-phase products in development at one time would remain at today's figure of eight to ten. "There is a process of further weeding out," he said. "There are some things which could not be classified as innovative at this point."

He said the cuts could involve changing the number of technicians per researcher and "making sure we get the right skill sets to remain competitive."

Chief executive officer Richard Markham Wednesday urged "all parties" to "work closely and constructively to achieve common long-term goals."

"By responding quickly and cooperatively we can ensure our future competitiveness," he said.

 

By: Grace Williams
+44 208 652 3214

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