In pharma ripple effect, Lonza cuts jobs

In proof that pharma troubles can set off a chain reaction of cuts, the chemicals company Lonza has joined the layoff parade. The company is shuttering three plants later this year in a move that will claim 175 jobs. The plant closures are set for Conshohocken, PA; Shawinigan, Quebec; and Wokingham, England, the Philadelphia Business Journal reports.

Lonza supplies active ingredients and other chemicals to drug makers and other life sciences customers. Just as generic competition and government price cuts--in addition to other pressures--have forced Big Pharma to slash jobs and otherwise reduce their costs, so have companies such as Lonza that supply materials or provide services to pharma customers.

And just as Big Pharma has, Lonza is availing itself of the lower production costs in Asia. Companies officials said that the three plants are being closed as part of a strategic shift of production to Asia. "The closure of the three sites will help to optimize our global operational network and further increase the competitiveness for our customers," Lonza CEO Stefan Borgas said in a statement. "The re-engineering project is a key element in our endeavor to bring Lonza back to a sustainable growth."

Lonza isn't the only pharma-dependent company that's cut back, either. You'll recall that IMS Health, which supplies prescription data to drugmakers' marketing departments, has also cut jobs. With pharma cost-reductions continuing, chances are that we can expect more ripple-effect cuts. So stay tuned.

- get Lonza's release
- check out the PBJ story
- see the Wall Street Journal's take

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