Sanofi to unveil plans for French research shake-up

PARIS Mon Sep 24, 2012 12:58pm EDT

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PARIS (Reuters) - French drugmaker Sanofi will reveal on Tuesday how it plans to shake up its French research operations in a cost-cutting drive which unions predict could mean up to 2,500 layoffs.

The French government has criticised Sanofi's cutback plans when France has rising unemployment, which is predicted to hit more than 3 million for the first time during the economic crisis, official data may show on Wednesday.

Industry Minister Arnaud Montebourg, who has sided with the unions, has called the plan "unacceptable." The mayor of the southern town of Toulouse, which could lose around 600 jobs with the closure of a cancer research centre, has called Sanofi's top managers "gangsters."

Sanofi employs 28,000 staff in France, representing 25 percent of the company's total workforce, across 49 sites such as the Paris headquarters, research laboratories, production and distribution facilities.

Like other major drugmakers, the company is under pressure from patent expiries as well as government cuts in healthcare spending, while it has struggled to bring new drugs to market.

The French plan is part of a wider 2 billion euro ($2.60 billion) cost-cutting drive that Sanofi announced in September 2011.

But Sanofi's French cuts come at a difficult time.

Several other French companies, including car maker PSA Peugeot Citroen, have announced big job cut plans since the election of the new government in May, creating a headache for French President Francois Hollande.

Hollande's approval ratings have tumbled to their lowest level since he first took office, a new poll showed on Sunday.

Unlike Peugeot, Sanofi remains profitable, even though its earnings are expected to shrink between 12 and 15 percent this year due to the loss of top-selling drugs previously protected by patents.

The unions are incensed that cuts will be made when Sanofi is making strong profits and demonstrations against them have taken place at the centers that are facing job losses.

Sanofi has declined to provide details of job cuts ahead of consultations with staff and meetings with staff representatives planned for Tuesday and for October 3.

SHUTTERING LABORATORIES

In addition to Toulouse, research jobs could go in Montpellier, southern France, in addition to Strasbourg, eastern France, as well as Chilly and Vitry-sur-Seine near Paris.

A number of vaccines unit and support jobs could also be slashed as part of the reshuffle.

Chief Executive Chris Viehbacher, a German Canadian who is Sanofi's first non-French top manager, is now focusing on France as part of his drive to boost productivity in research labs company-wide after wielding the axe in other countries.

"The reality is that our research in France hasn't really come up with a new medicine in 20 years and therefore we have to take a much more productive approach to how we do this," he told analysts in July. "It is a reorganization within France. It's not externalizing research to other countries."

The company is regrouping its research operations around the world into regional hubs - such as Boston, where its rare disease unit Genzyme and cancer research labs are based - while shuttering other laboratories.

Since announcing the wider cost cutting plan in September last year, the company has shed jobs in the United States and Europe and announced plans to close a manufacturing plant in the U.K.

Sanofi is not alone. Other pharmaceutical companies have cutback to cope with the impact of generic competition, lackluster drug pipelines and healthcare spending cuts.

Astrazeneca in February announced a further 7,300 layoffs that included 2,200 R&D staff, while Roche in June said it would overhaul its research operations by closing the 80-year-old New Jersey facility where Valium was discovered, cutting 1,000 jobs and replacing its drug research chief.

(Reporting by Elena Berton; Additional reporting by Noelle Mennella in Paris. Editing by Jane Merriman)

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