Schering-Plough Cutting Jobs, Plants To Save $1.5B
7 CommentsBy Ed Silverman // April 2nd, 2008 // 5:33 pm
The drugmaker, which is reeling from the controversy over Vytorin and the ensuing drop in prescriptions, is closing plants and cutting 10 percent of its workforce of 55,000 in order to save up to $1.5 billion. The move also comes a few months after Schering-Plough bought Organon Biosciences and had already begun slashing jobs to reduce expenses by $500 million which, of course, means the latest problems contributed to the extra $1 billion in savings targeted.
“The whole company is built around cholesterol,” Hassan says in a teleconference.
At least $1.25 billion is slated to be wrung out of operations by 2010, and the rest by 2012. To achieve these goals, ceo Fred Hassan wants to consolidate management; use more shared staff support and services; reduce travel; cut sales and marketing; slash R&D; consolidate product lines, particularly in the animal health unit; and close some of the 60 manufacturing plants. Entertainment will also be cut, but it’s not clear if this means the end of the schmoozefest known as the ‘49 Plan‘ to wine and dine docs.
“Hard new realities are requiring the hard new actions” taken, Hassan says in a statement. “An example of these intense overall new pressures has been the confusion in the cholesterol market largely caused by the overreaction to conflicting results of the relatively small Enhance clinical trial, involving Vytorin. This confusion, in the absence of an open and balanced scientific discussion of this clinical trial, have caused an unwarranted concern among millions of patients who need to get to their cholesterol goals. This episode has been a case study of the impact of the hard new realities.”
Doc
Hey Fred, guess who you have to blame for the “over reaction”? Look in the mirror. Ever read Jim Collins book ‘Good to Great’? Leadership starts at the top, don’t kill the reputation you have built up over time. This is a self inflicted wound and docs now question SPGs credibility, what a shame.
Chris
Doc
SPG’s credibility was at rock bottom for years and in consequence so was its share price. Hassan et al at least began the clean up. And when people talk about the monster fines paid in recent years it’s important to note they were the legacy of the geniuses that preceded Hassan’s crew.
Doc
Chris,
Exactly my point, he seemed to have a good turnaround going, why risk that with a large percentage of your primary customers? Sure not every doc will think SGP was treated fairly, but they shot themselves in the foot.
Chris
Doc,
No idea but I suspect that the ENHANCE trial grew into a major issue gradually, not overnight. It would be insane to risk alienating a large percentage of customers and so I have to believe this slowly built up to the major problem it has now become with all the attendant adverse publicity. I do not believe this was a deliberate strategy but one that emerged and was followed expediently.
Paul
In my humble opinion, I believe the following:
- The whole cardiology and medical community has for years sold us on the concept that lower bad cholesterol (and higher good one) is a good thing
- Vytorin does this better than Zocor alone and does it better than any statin alone including Lipitor and Crestor (at safe doses anyway)
- ENHANCE was a trial that was worth doing but was not “pivotal” in the sense that it would make or break the product (not by design anyway)
- SPG completely blew its handling of the study, of the principal investigator, of the cardiology community, of the media, of congress, etc.
- It is SPG’s own doing
- Unfortunately with its incompetence it has dragged the whole cholesterol story (who knows what we can believe now), the ACC (who knew they were so amateur), Merck (who was just turning itself around), and patients who are going to pay the price because they will be not be treated aggressively to lower their risk.
SP 2
I don’t think that Hassan, Cox and company has really done a damn thing for SP. The clean-up was just squeezing blood out of a turnip. They squeezed and squeezed and squeezed until they couldn’t squeeze anymore.
Fred and Carrie really blew it. If the SP turnaround was genuine, the company would be in better shape today. Now, they’re turning around and punsihing the employees for their mistakes. Institutional investors should be after the board. There should be some serious questions raised as to whether this regime should even continue.
Disgusted
Good ol’ Fast Freddie Hassan, the Hatchet Man, doing what he does best. When your company is in trouble, when your profits are threatened, when your fortune is at stake, chop off employees at the knees, underfund research & development and sacrifice the future of the company. The man is not the savior he wants everyone to believe. He’s a symbol of what’s wrong with Big Pharma - fat cat top executives surrounded by “yes” people..