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
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