Takeda's new outsider CFO charged with $1B cost-cutting plan

Carrying out a $1 billion cost-cutting program is easier if you're a stranger. That's the view of Takeda Pharmaceutical CFO François-Xavier Roger, who stepped into his role in September and took up the mantle of efficiency czar. Most recently the finance chief at Millicom International Cellular, Roger has no pet projects or emotional baggage to get in the way of slashing ¥100 billion from the drugmaker's cost structure by 2017.

"I'm not a party to the history of any original part of the company, so I don't have any specific interest in trying to protect something that happened in the past," Roger told the newspaper.

Takeda unveiled the bare bones of its "Project Summit" cost-cutting drive in May, when it announced its latest 5-year plan. Soon after, the company said it would fold Millennium, its biotech arm, into the company's overall operations, and Millennium's longtime CEO, Deborah Dunsire, left. Just two weeks ago, Roger publicly fleshed out Project Summit's aims--and they go far beyond the R&D cuts already in the works.

In fact, the company figures on saving more than ¥25 billion in R&D by 2015, pushing that to ¥30 billion by 2017--but Takeda is looking to squeeze almost as much from its sales and marketing organization. According to a presentation made at the end of October, the company aims for ¥20 billion in cuts in that area by 2015, with another ¥5 billion added to that by 2015.

How? Takeda plans to centralize its brand marketing organization so that global and multiregional products get a singular focus. That centralized approach will "generate efficiencies," the company figures. Plus, Takeda plans to consolidate advertising and other marketing agencies worldwide, and globalize procurement as well. A centralized approach to administrative areas--finance, IT, HR, and the like--will save another ¥15 billion by 2017.

Roger told The Wall Street Journal that Project Summit is mostly about squeezing costs by becoming more efficient, but job cuts will come with the territory, too. The workforce could shrink by as much as 5% by 2017, he said. If the pace of job cuts mirrors the pace of overall cost savings, then they'll be front-loaded onto the next couple of years. And 5% of Takeda's workforce of 31,000-plus amounts to more than 1,500 jobs.

Takeda has already been cutting the payroll as a result of its Nycomed buyout, which closed in 2011. Last January, the company said it would shed 2,800 jobs as it integrated the Swiss drugmaker and made its overall operations more efficient. The latest round of cost cuts follows some serious sales declines as Takeda absorbed generic competition for its leading drug, the diabetes fighter Actos. Before it fell off patent in August 2012, Actos had grown to a $4.3 billion drug, and its $3.35 billion in U.S. sales accounted for more than half of the company's U.S. revenue.

- see Takeda's Project Summit slides (PDF)
- read the WSJ piece (sub. req.)

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