Roche (RHHBY) To Slash 100 Jobs In Response To Price Controls
9/3/2014 6:13:13 AM
September 3, 2014
By Mark Terry, BioSpace.com Breaking News Staff
As an apparent result of price controls and competition, Roche (RHHBY) has announced it will be restructuring its pharmaceuticals business in Spain, Roche Farma. The biggest initial effect will be the loss of 100 jobs. Beginning on November 1st, the company will implement a new organizational model to improve efficiency and competitiveness. In a statement, Andreas Abt, General Manager of the Roche Farma subsidiary, said that the new organizational structure intends to create “greater simplification and flexibility in decision-making, promoting teamwork between all areas.”
The Spanish subsidiary is Roche Farma, S.A. It manufactures and distributes diagnostic and pharmaceutical products, including antibiotics and antivirals, vitamins, non-prescription, over-the-counter medications, and drugs to treat cardiovascular, CNS, GI and dermatological disorders. In 2014 Roche Farma was awarded the Top Employers Europe 2014 and Top Employers España 2014 certification. It employs about 1,150 people and is active in 108 countries.
Roche recently ran into issues regarding price controls in the U.K. when Britain’s state-run health service decided not to reimburse for a breast cancer drug because of costs. The drug, Kadcyla®, is used to treat HER2 positive breast cancer that has metastasized and would not respond to other treatments and was not eligible for surgical treatment. Approved in the EU in November 2013, Kadcyla costs approximately $152,800 per patient over a 14-1/2 month course of treatment. The National Institute for Health and Care Excellence (NICE) noted the drug was too expensive for the National Health Service (NHS) to fund routinely. Roche responded by indicating in order to meet NICE’s cost-effectiveness threshold, the company would have to discount the drug by 60 percent, which was not achievable.
Recently Roche price controls the acquisition of Brisbane, California biotech company InterMune, Inc. for $8.3 billion in cash. InterMune’s primary product is pirfenidone, marked in the EU and Canada as Esbriet®, a treatment for idiopathic pulmonary fibrosis (IPF). In 2014, sales of Esbriet hit $35.7 million in Q2 2014, although some analysts predict sales to hit $1 billion.
The Roche Farma layoffs will focus on the sales network, medical and media departments, which employ about 550 people. The collective dismissal procedure will begin with negotiation with union representatives and look for potential alternatives in order to minimize the impact to employees and the company. The negotiations will also define terms for relocation or new working conditions, and are expected to be completed by October 1. The layoffs are not expected to affect production facilities in Leganes and the IT Centre of Excellence, which is located in Madrid.
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