Roche To Restructure

Roche has launched a group-wide Operational Excellence initiative aimed at “adapting to cost structures and accelerating productivity improvements.” The initiative is scheduled for implementation during 2011 and 2012.

Analysts speculate that the company will cut between $2 and $3 billion from its cost structure, which could result from eliminating part of its sales force and reducing overlap with U.S. unit Genentech. The need to reduce costs stems from pipeline setbacks, a narrower window for Avastin, and the health-care overhauls in the U.S. and Europe.

During the next few months, all parts of the organization will review their respective structures and processes. Decisions on the restructuring and the potential impact on staffing levels are expected before the end of the year.

Severin Schwan, chief executive officer of Roche, said, “We have launched this initiative from a position of strength. By contrast with many of our competitors, we are only marginally affected by patent expiries. Furthermore, despite the recent setbacks, we have one of the strongest R&D product pipelines in the industry. We will focus our resources towards investments that will drive innovation and ensure the company’s long-term success, while at the same time protecting our profitability so as to safeguard our financial flexibility.”