* Sanofi plans 186 net job cuts in French R&D - memo
* Drugmaker wants to regroup scattered R&D sites into hubs
* Unions plan protests at French sites throughout the week
* Dispute is roadblock in race for higher R&D efficiency
By Natalie Huet and Noëlle Mennella
PARIS, Oct 14 Sanofi, trying to
squeeze more out of R&D spending like other big drugmakers, is
finding its home market France a difficult place to cut costs
because of complex labour laws, union opposition and a
government eager to protect jobs.
The company, which scaled back job cut plans in France a
year ago due to political pressure, will start a new round of
talks with unions on Tuesday that are likely to be tough.
Unions have called for lab workers to walk off the job
throughout the week to protest against Sanofi's latest plans,
which involve 186 net job cuts in research and 453 transfers to
other sites, according to an internal memo seen by Reuters.
Like its peers, Sanofi has been regrouping research
operations around the world and shifting resources away from
Europe, where austerity-driven price cuts and delays in the
roll-out of new drugs have reduced rewards for innovation.
Merck, Pfizer and AstraZeneca have
cut jobs by the thousands also partly in response to competition
from cheaper generic medicines.
But Sanofi has had to tread carefully due to its strong
presence in France, where the government is battling to protect
high-tech jobs and stem unemployment already above 10 percent.
France, home to about a third of Sanofi's R&D resources
worldwide, is its biggest headache in terms of boosting research
efficiency, something rivals are focused on to improve returns.
"Having the operations in France is sort of a handicap for
them (Sanofi) given the strict labour laws there ... especially
compared to U.S. companies," said Damien Conover, a
Chicago-based senior analyst for Morningstar.
German-Canadian CEO Chris Viehbacher - Sanofi's first
non-French boss - has already cut research jobs in Britain and
the United States and now wants to regroup sites scattered
across France into clusters around Paris, Lyon and Strasbourg.
The fate of a research centre in Toulouse, where Sanofi
employs around 600 people, has been the focus of unions and
local politicians. Sanofi agreed in May to keep a presence there
for about five years. But in the memo detailing its latest
plans, Sanofi aims to cut staff there to 370 jobs, despite a
government-commissioned report recommending it keep 500.
"Management told us there would be ultimately be layoffs
because some people will refuse to leave Toulouse or Montpellier
and they'll find themselves without a job," said Stephane
Galiné, who represents R&D workers at the moderate CFDT union.
The Toulouse site, isolated in the south of France,
epitomises an old-fashioned, inward-looking approach to R&D.
Sanofi wants to create more open, collaborative research hubs
that bring together academic institutes and budding biotechs in
life science hotbeds.
In the United States, the company has been building a
research hub around Boston since it took over U.S. biotechnology
Genzyme in 2011. It has R&D sites in Germany, Canada and Japan.
But a quarter of Sanofi's global workforce is in France -
some 28,000 people - including around 5,000 in R&D.
"Sanofi is and will remain the biggest private investor in
research in France," a Sanofi spokeswoman said, noting that with
1.8 billion euros ($2.44 billion) last year, France accounted
for 40 percent of the company's R&D budget worldwide.
But out of 12 drugs Sanofi expects to launch by 2015, only
two come from in-house research, she said, highlighting the need
to reorganise research in France to make it more productive.
In the internal memo seen by Reuters, Sanofi said that while
it spent more than its peers on research, it took the company on
average 20 percent longer to develop a new drug.
Between 2008 and 2011, Sanofi spent around 105 million euros
for each new molecule entering clinical trials, compared to an
industry average of about 35 million euros, the memo said.
Sanofi R&D chief Elias Zerhouni put the case for radical
change at an investor conference last month. "The pride of
internal innovation has been the bane, in my view, of main-line
pharma companies. I think this is sort of a mirage, a delusional
thing," Zerhouni said. "That kind of arrogance, I think, has to
be chased away. No barriers. Go where the best science is."
Sanofi's attempts to remedy this situation, however, are up
against the French government's efforts to protect jobs.
Last year, when unions predicted Sanofi could scrap 2,500
jobs in the country, Industry Minister Arnaud Montebourg said a
company making profits by the billions could not behave like a
company in trouble. Sanofi later scaled back its plans to around
900 job cuts by 2015. Last week, the Socialist
government warned it could block job cut plans at telecoms firm
This highlights tensions between a state with a long history
of intervention in the corporate sector and the global
aspirations of the French companies it once helped to grow.
In 2004, when France pushed Sanofi to merge with rival
Aventis, the aim was to build a French powerhouse. Now Sanofi,
the world's fourth-largest drugmaker, makes nearly a third of
revenues in emerging markets and less than 8 percent in France.
"Although Sanofi is a global company ... it certainly
appears to be still very much perceived as a national champion,"
said Federica Benassi, analyst at IHS.