Boehringer slashes 724 jobs off U.S. sales payroll to boost R&D spending

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Boehringer Ingelheim’s U.S. unit has joined the pharmas cutting back their sales operations to squeeze costs. The Germany-based company plans to delete 724 jobs from its payroll, mostly in sales, according to a notice filed Wednesday with the state of Connecticut.

Forty-nine of those cuts will hit at Boehringer’s U.S. headquarters in Danbury, CT, with the rest in other operations across the country. Boehringer’s WARN notice to the state said the layoffs would be complete at the end of August.

The privately held drugmaker joins some of its bigger rivals in shrinking its sales and admin operations to save money and divert more cash toward R&D. Notably, AstraZeneca said earlier this year it would cut jobs and manufacturing to save $1.1 billion, much of which it plans to invest in drug development.

“Following a careful examination of our human pharmaceuticals business, we made the difficult decision to eliminate (the positions),” Boehringer spokeswoman Erin Crew said in a statement. Many of those given pink slips will have the chance to apply for jobs elsewhere in the company, she added.

“The actions we are taking now will help us reinvent the way we serve the needs of our patients, and enable us to continue to make significant investments” in R&D, Crew said.

Boehringer’s latest cuts come as the company struggles with patent-cliff losses--its blockbuster blood pressure drug Micardis took a big hit from generics last year--and pricing pressures in the U.S. market. The company announced layoffs of about 900 in 2014 as part of a drive to cut costs by 15%. Last summer it announced it would sell its U.S. generics operation, Roxane Labs, to Jordan's Hikma Pharmaceuticals for $2.65 billion, saying it needed to focus on drug development and branded drug sales--hence the need to up spending on R&D. The price on that deal since has shrunk, however; after Roxane put up disappointing 2015 sales, Hikma cut its offer by $525 million.

One bright spot for Boehringer has been in diabetes, where revenue leapt 49% in currency-adjusted terms last year to €1.1 billion ($1.24 billion). The company sees its diabetes portfolio--consisting of 6 meds the company shares with partner Eli Lilly ($LLY)--as having now “established itself as a long-term growth driver” that Boehringer expects will keep revenues flowing. Earlier this week, the company’s SGLT2 drug Jardiance won FDA panel backing for a new heart-risks claim that could help boost sales.

- see the company’s WARN notice listing

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