Sanofi ($SNY) is starting its latest round of job cuts with more than 500 in its home country. According to media reports, almost 300 open R&D jobs won't be filled, with another 250-plus cuts hitting Sanofi's commercial operations and corporate offices.
Some layoffs have been expected since November, when the company said it would slash €1.5 billion worth of annual costs. Sanofi had estimated a few hundred job cuts in France per year for three years, Le Figaro reports.
Sanofi officials met with union leaders Tuesday to unveil some details. Exact numbers vary, but multiple media reports say the company plans to cut 280 to 296 open R&D positions. More than 100 additional jobs will go in administrative and support functions, union rep Thierry Bodin told Bloomberg, with an additional 155 cut in commercial.
The payroll reductions could affect manufacturing and vaccines as well as R&D, sales, and management functions, some union sources told the French media. Individual union committees will meet Thursday, Le Figaro says.
Sanofi officials assured the unions that production sites would not be closed and most of the affected employees will be offered "fully-funded" retirement packages, the French newspaper reports.
The latest round of cuts follows a series of workforce reductions in Sanofi's French operations since 2008. The company has shrunk its payroll by about 1,300 jobs in France since 2008, in a combination of thousands of job cuts and hiring in other functions.
The French cuts are part of that €1.5 billion reduction in costs ($1.6 billion) promised by CEO Olivier Brandicourt in November--and part of a companywide overhaul aimed at restoring Sanofi's fortunes. The newly minted CEO reorganized management last year, and in January, the company officially split into new internal units, which will use money gained via cost cuts to invest in research and acquisitions. The company is also negotiating a swap with Boehringer Ingelheim that would send its animal health unit, Merial, to the German company in return for a consumer health business.
At this stage, it is unclear exactly where else the ax will fall. Brandicourt said in November that two thirds of the savings will come from the "simplification of the organization," with the rest being generated by "investment prioritization." He had already warned unions in France that manufacturing costs must fall, and followed up with a pledge to "reshape" of the manufacturing network.
Brandicourt's overhaul comes as Sanofi's sales are suffering from a sluggish diabetes franchise, thanks in part to payer pressure on pricing. The company is also bracing for U.S. biosimilar competition to its longtime best-seller, Lantus; Eli Lilly ($LLY) and Boehringer Ingelheim are set to roll out their version of the med next December under a recent settlement deal with Sanofi.
- read the Le Figaro story (in French)
Editor's note: This story was updated with background on Sanofi's reorganization and deal plans.