PARIS French drugmaker Sanofi SA scaled back planned layoffs under pressure from the French government, which has been struggling to contain a burgeoning unemployment rate.
Sanofi, France's No. 2 company by market value after Total, said it could shed around 900 jobs in France in the next three years, fewer than the 2,500 predicted in July by trade unions, as part of the company's planned reshuffle of its research operations.
The French government, which had strongly criticized Sanofi's cutback plans amid rising unemployment and similar plans by troubled car maker PSA Peugeot Citroen, said it had made Sanofi Chief Executive Christopher Viehbacher listen to reason.
French Industry Minister Arnaud Montebourg told reporters Sanofi had "followed the government's recommendations" after a meeting on Monday evening, where the company initially offered to shrink its plan to 1,370 layoffs from an initial figure of 2,300.
Montebourg said he asked Sanofi to further reduce that number.
"A company that's earning money cannot behave like a company in trouble," Montebourg told journalists. "After a meeting with the CEO, whom I saw again last night, I explained that this layoff plan was abusive and that it needed to be reduced, which has been done in two waves."
Sanofi's plan, first mooted in early July, attracted the wrath of French politicians, with Montebourg calling the layoffs "unacceptable" and Pierre Cohen, mayor of the southern town of Toulouse which faced around 600 layoffs at a research center, labeling the company's top management "gangsters".
Sanofi aims to achieve the 900 cuts through early retirement, voluntary redundancies and redeploying people within the company, it said in a statement on Tuesday.
The group added it does not plan to move any of its sites or reduce the number of industrial locations it has in France.
The future of its cancer research center in Toulouse, however, remains uncertain.
Sanofi said it had found potential stakeholders to maintain operations at the site and it would strive to find "concrete solutions" in coming months.
Trade unions are calling for a strike on October 3, when a further meeting between Sanofi and staff representatives is due to take place, and said they are seeking contact with Montebourg.
"The only news is the 900 cuts, which doesn't take into account staff in Toulouse," Pascal Vially, a representative for the CFDT trade union, told Reuters. "In total, 1,500 jobs are at risk, which is at the lower end of our expectations but still too much."
Unions had predicted that Sanofi would seek to axe between 1,200 and 2,500 of its 28,000 jobs in France. The company employs around 110,000 worldwide.
The company had declined to provide details of its planned reshuffle ahead of consultations with staff and meetings with staff representatives.
Like other major drugmakers, the company is under pressure from patent expiries as well as government cuts in healthcare spending. It has also struggled to bring new drugs to market.
The French plan is part of a wider 2 billion euro ($2.6 billion) cost-cutting drive that Sanofi announced in September 2011 and follows a series of job cuts in the United States and Europe.
Shares in Sanofi were trading flat at 5:29 a.m. EDT (0929 GMT), slightly outperforming the French blue-chip CAC 40 index, which was down 0.3 percent.
(Additional reporting by Gilles Guillaume, Nicholas Vinocur and Noelle Mennella in Paris; Editing by James Regan and David Holmes)