Sector News

Mylan eyes up to 3,500 layoffs in post-M&A cost-cutting drive

December 7, 2016
Life sciences

Newly bulked up by M&A, Mylan on Wednesday said it would eliminate a big chunk of its workforce in a restructuring designed to cut costs and refocus operations. Thousands of the company’s employees worldwide could lose their jobs.

The company’s moves to “reduce redundancy” will impact “less than 10%” of its global workforce, according to a spokesperson. At of the end of 2015, Mylan employed nearly 35,000 people around the world, meaning the new cuts could affect roughly 3,500 people at the high end.

In an SEC filing, Mylan said it’s “developing the details” of the cutbacks and will share more information about cost savings and restructuring costs as the moves are finalized.

Mylan has had a tough year already. Its CEO was hauled up in front of a Congressional committee to defend EpiPen price hikes that triggered a public firestorm, and it agreed to fork over $465 million to the Justice Department to make up for years of underpaid Medicaid rebates on the product. The post-M&A job cuts, typically seen as bad news by employees and the public, but good news for investors, might set off another round of negative publicity, Wells Fargo analyst David Maris said in a Wednesday note.

“[T]he current environment is very sensitive about restructurings and headcount reductions and this may represent another headline or sentiment risk,” Maris wrote.

But cost-saving restructurings are standard fare after deals close, he pointed out: “That said, we believe a company should do what is best for the long run health of the company and integrating deals is an important process to achieve deal benefits.”

And Mylan has been on an acquisition binge in recent years. It shelled out $5.3 billion to buy out Abbott Laboratories generic meds in 2015, transferring its tax headquarters to the Netherlands in the process. This year, it snapped up the Swedish drugmaker Meda for $7 billion and paid $1 billion for a slate of topical skin meds from Renaissance Holdings.

So, with “synergies” promised along with that dealmaking, Mylan is now “focusing on how to best optimize and maximize all of our assets,” according to the statement.

It’s already begun in a smaller fashion. Back in October, shortly after closing its Meda deal, Mylan announced a plan to shutter that subsidiary’s U.S. headquarters in a decision that left 94 employees in New Jersey without jobs. The company said it was “working closely” with affected employees to provide “severance, benefits and outplacement services during this transition.”

At the time of the Meda announcement, some market watchers thought the company may have overpaid, with shares falling about 17% on the news. Meda brought pharma products, OTC drugs and generics after Mylan ultimately fell short on its hostile effort to snag generics rival Perrigo for $26 billion.

Mylan joins the likes of AstraZeneca, Novo Nordisk, Sanofi and Boehringer Ingelheim to announce sizable layoffs this year as factors such as pricing pressure take a toll on the industry.

Mylan’s own EpiPen pricing scrutiny has resulted in several investigations, as well as that pending settlement with the Department of Justice. In response, the company announced it would increase its patient access programs and introduce an authorized generic at half the price. That EpiPen generic, intended to mollify angry patients, could make a dent in its franchise revenue, though direct-to-patient sales should ease that pain.

By Eric Sagonowsky

Source: Fierce Pharma

comments closed

Related News

May 21, 2022

As monkeypox cases emerge in US and Europe, Bavarian Nordic inks vaccine order

Life sciences

A monkeypox outbreak is emerging in the U.S. and Europe, and at least one country is amping up countermeasure preparedness. Bavarian Nordic has secured a contract with an unnamed European country to supply its smallpox vaccine, called Imvanex in Europe, in response to the emergence of monkeypox cases, the Danish company said Thursday.

May 21, 2022

Moderna chairman Afeyan defends hiring practices after CFO debacle: report

Life sciences

Moderna’s recent chief financial officer debacle—in which Jorge Gomez departed on his second day on the job—raised questions about the company’s hiring process given its rush to global biopharma prominence. The most obvious one: How was it possible for Gomez to be hired when he was under investigation by his previous employer, Dentsply Sirona of Charlotte, N.C.

May 21, 2022

Merck to pay up to $1.4B in cancer deal with Kelun, but details are scarce

Life sciences

Merck & Co. is plucking a cancer project from the branch of Chinese-based Kelun Pharmaceutical for up to $1.4 billion, but details from the New Jersey-based Big Pharma have been hard to come by. The deal, first disclosed Monday on the Shenzhen stock exchange, has Merck handing over $47 million in upfront cash in exchange for ex-China rights to a “macromolecular tumor project.”