Sanofi, Teva face renewed backlash as job cuts hit home countries

Two drug company reorganizations. Two goals in mind. One common obstacle. As Teva Pharmaceutical Industries copes with the Israeli backlash from last week's layoff announcement, Sanofi continues to feel the heat from French leaders on its own R&D restructuring scheme.

The situation Teva ($TEVA) now faces is eerily similar to Sanofi's ($SNY) experience in France last year. Immediately after learning that job cuts would hit Teva's home country, Israel, local labor leaders vowed to strike. By this morning, government officials had jumped into the game. Reportedly, Israeli Finance Minister Yair Lapid and labor leaders "see eye to eye" on the need to protect Teva's employees. And State Comptroller Joseph Shapira called Teva's layoff plans "out of place."

"We heard what large amounts the executives get as benefits or bonuses, and when the moment of truth comes to pay taxes, they announce layoffs," Shapira told Ynet. His opinion echoes that of "many educated others' who have said (the same) in recent days," he said.

It appears Teva's job-cutting plans--like Sanofi's before it--are particularly irksome to officials because they come amid other companies' layoff announcements. In Teva's case, that's Oil Refineries Ltd., which said it would cut 240 employees loose as it works to renegotiate its debt load. Ofer Eini, who heads up the confederacy of Israeli trade unions, Histadrut, today convened a special meeting about both companies' job-cutting plans. Eini also planned to meet with Teva CEO Jeremy Levin, Globes reports.

Meanwhile, after months of negotiating with French officials about its plans to centralize R&D operations at home--and cut jobs in the process--Sanofi faces another round of worker strikes at sites around France. Last year, Sanofi CEO Chris Viehbacher agreed to scale back Sanofi's job cuts at home--to 900 jobs, compared with union estimates of 2,500--but pledged to consolidate several research sites into a few French clusters. Now, Reuters reports that Sanofi wants to cut 186 jobs in research and transfer 453 others to other sites.

Sanofi's site in Toulouse is a particularly thorny problem; as Reuters notes, Viehbacher last year said Sanofi would keep the site open for about 5 years, but it still wants to shrink its workforce there. As one union leader said, some Sanofi employees will refuse to move from Toulouse to the new clusters in Paris, Lyon and Strasbourg, "and they'll find themselves without a job."

For both companies, operations in their home countries are proving more difficult to cut than those in other countries. Morningstar analyst Damien Conover told Reuters that "having the operations in France is sort of a handicap for [Sanofi]." Likewise for Teva, which reportedly is considering shifting manufacturing from Israel to countries with lighter regulation--and weaker unions. Meanwhile, according to Haaretz, Teva is stepping up production of all its products now in case of a forced shutdown.

- get the Ynet piece
- read the Globes story
- check out the Reuters news
- see the Haaretz article

Special Reports: Top 10 Pharma Companies by Employees - Sanofi | Top Pharma Layoffs of 2012 - Sanofi

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