Markets

Cuts for Christmas: Sanofi to Lay Off 1,700 Through December

By Jim Edwards

Updated on: October 8, 2010 / 12:23 PM EDT / MoneyWatch

Sanofi-Aventis' (SNY) move to cut 1,700 jobs from its 13,000 U.S. workforce was expected -- given the end of its monopoly on blood-clot preventer Lovenox and the tepid sales of its new heart drug Multaq -- but it adds a new dynamic to the company's attempt to take over Genzyme (GENZ).

Sanofi already has enough cash on standby to buy Genzyme's outstanding stock. So the company doesn't need to make these cuts to fund the buyout. In fact, with severance and restructuring fees, expenses at Sanofi are about to go through the roof in the short term.

These cuts, therefore, are fundamentally about Sanofi's own weaknesses. The layoffs were announced by president Greg Irace at a town hall meeting at Sanofi's Bridgewater, N.J., HQ this morning. About 1,400 pharmaceutical sales rep positions will be cut -- roughly a quarter of its 5,000 force -- along with 300 jobs at the company's home office.

BNET understands that Sanofi's R&D, vaccines division and its Chattem consumer products unit will largely be spared. The layoffs will take place through mid-December, thus matching Sanofi's odd habit of wielding the ax around the holidays. A Sanofi spokesperson told BNET:

We have 105,000 employees globally so this represents a little more than 1 percent of global workforce. Barring any unforeseen events, we believe the changes we are making today will make us the right size for our product portfolio through 2013 when we expect to return to growth. We recognize that ongoing waves of staff reductions are disruptive for our employees and we felt it was critical to stabilize the organization by making the announcements now.

Sanofi's bulletin board on Cafe Pharma, the online gossip site for drug biz executives, was on fire by lunchtime, with 99 people logged on at once -- a sure sign of workplace angst.

At Genzyme, the cuts will probably help convince CEO Henri Termeer that Sanofi's situation is increasingly desperate and that he is right to hold out for a greater price than $69 a share for his company. Which means this deal is going to drag on for some time yet ...
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