After closing its deal for Salix Pharmaceuticals, Valeant ($VRX) wasted no time getting down to business with the cost-cutting it's known for. And now, North Carolina's Triangle area has another 250-plus pharma layoffs to add to a growing list.
Valeant will send 258 Salix staffers packing, the Triangle Business Journal reports--an announcement that came one day after the companies officially tied the knot. The job-shedding will begin this week and carry on through Oct. 30, with the cuts hitting a wide range of job functions.
One area that's safe, though, is specialty sales. After signing their original pact in February--a $10 billion offer that the Canadian pharma upped to $15.8 billion after pressure from rival bidder Endo ($ENDP)--Valeant CEO J. Michael Pearson acknowledged that he'd need that award-winning sales force and Salix's hospital, key account and field reimbursement teams to help his company foray into the GI arena.
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| Valeant CEO J. Michael Pearson |
"We believe Salix's sales force is, by far, the strongest in the GI space and it has been a key part of their success," he told investors on a conference call, noting later that, "we believe these customer-facing roles have played and will play a huge role in the success of the company."
The layoffs are part of a cost-savings drive that will top $500 million if Pearson gets his way. As Evercore ISI analyst Umer Raffat pointed out in a February note to clients, that equates to about 75% of Salix's SG&A and R&D expenses. But that kind of penny-pinching is par for the course for Valeant, whose business model relies on wringing money out of plentiful acquisitions. Last month, it did the same at Dendreon, chopping 77 positions from the bankrupt oncology outfit it picked up shortly before Salix.
Meanwhile, though, it's a tough time to be a Triangle pharma staffer, the TBJ points out. More than 1,000 industry employees have recently been dismissed, thanks to Hospira--which Pfizer ($PFE) agreed to buy up earlier this year--and GlaxoSmithKline ($GSK), which is wielding the ax to compensate for lost sales of fading blockbuster Advair.
- read the TBJ story
Special Reports: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb - Salix/Santarus | The top 10 largest pharma layoffs in 2013 - Endo