BMS plots major job cuts at plants in France

Government officials in France have been known to scream loudly when drugmakers have planned job-costing moves like plant closures. But in a twist on that theme, Bristol-Myers Squibb ($BMY) has sent French government officials a warning. If they change the national health policy to buy only generic paracetamol-based painkillers, it will have to lay off 40% of the workers at two plants in Agen that make its branded versions of the drugs.

The policy change, which could come as early as today, would lead to a huge cut to sales from the plants, Benoît Gallet, vice president for public affairs at Bristol-Myers Squibb France told The Wall Street Journal. "Clearly, we would no longer be 1,400 [employees] in Agen," he said.

The company last week told worker groups that if France decides it won't pay for branded drugs, the company would have to cut 550 jobs at the two plants, the WSJ said. BMS has also put the brakes on a €60 million investment that was in the works for the facilities. Workers were told that even with the cuts, the plants would barely be making a profit, raising questions about whether it could afford to keep them open.

Paracetamol is what is known in the U.S. as acetaminophen. The plants make a variety of branded versions of the painkillers, which generate about €180 million a year, the WSJ notes. There are generic versions of the drugs on the market. However, the branded versions from BMS and Sanofi ($SNY), which also has two plants making branded paracetamol, are the go-to products for doctors. That would change under a proposed policy that would make the generic versions of the painkillers automatically substitutable, as generics commonly are in the U.S. Generics, currently make up only about 25% of drugs sales in France, compared to about 75% in the U.K., and the government wants to move to more generics to cut its national healthcare bill.

In 2012, when Sanofi was looking to big job cuts in France, it ran into strong-arming from government officials and strikes by workers. This time, the government is feeling the heat. According to WSJ, unemployment in Agen is running at 16% and the possible jobs losses brought 2,000 people to the streets to protest. "If the plant shuts down, we're dead," said 59-year-old Christian Dumon, who has worked at one of the plants nearly 30 years. "There is nothing else here."

- read the WSJ piece (sub. req.)

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