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Roche Layoffs: Whose Jobs Are Safe, and Whose Aren't?

By Jim Edwards

Updated on: November 17, 2010 / 4:43 PM EST / MoneyWatch

UPDATE: Why Roche's CEO Is Wrong to Blame Obamacare for 4,800 Layoffs

Roche (ROG.VX) confirmed it will engage in a cost-cutting program last week and although it did not mention layoffs the assumption is that 1,500 jobs will be cut across the company. The company's official statement did not say where the ax will fall, although it did blame healthcare reform in the U.S. and cost-cutting in Europe for the need to find savings.

The truth, however, is that Roche's own problems are the driving force behind the need for cuts, not healthcare reform. Roche's Q2 2010 sales grew 2 percent in the U.S. -- despite reform -- and the company didn't even mention the impact of reform in its Q1 update. Novartis, another Swiss drug company, is facing identical challenges to Roche but for some reason doesn't need to make mass layoffs.

In fact, the company is in great shape, on paper. Sales are up 3 percent to $24.6 billion, and as CEO Severin Schwan says:

We have launched this initiative from a position of strength. 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.

The main reason Roche needs to lose staff is because it paid $47 billion to acquire Genentech and now needs to cut $2 to $3 billion from its annual operating costs to make that investment work (Swiss francs and U.S. dollars are roughly at parity).

Here's a guide to whose jobs are on the chopping block and whose are probably safe. Anyone working in sales on the following brands can probably rest easy. Sales continue to be strong:

Brand, sales in thousands of francs, % increase
Avastin 3,393, 14%
MabThera/Rituxan 3,301, 9%
Herceptin 2,806, 8%
Xeloda 732, 19%

The Herceptin brand looks particularly strong, as the company has two more regulatory approvals for the drug pending. Avastin, on the other hand, has no more approvals pending and its most recent one was in China.

If you're promoting these drugs, update your resume. Sales are declining fast:

Brand, sales in thousands of francs, % increase
Tamiflu 710, -31%
CellCept 702, -23%
NeoRecormon/Epogin 677, -13%
Nutropin 193, -5%
Xenical 183, -12%
Neutrogin 167, -11%

Also note that Europe and the U.S. will take a heavier hit than other countries, as those are the regions where sales are weakest.

Related:

Why Roche Employees Will Pay With Their Jobs for Cancer Drug Avastin's Success

Image by Flickr user Chris Campbell, CC