Determined to reduce costs in its manufacturing operations, Schering-Plough has announced the loss of 1,100 positions in manufacturing sites in Puerto Rico and New Jersey, aiming to save $100m (€78.1m) a year.
Despite a recent rise in sales thanks to its rheumatoid arthritis drug Remicade and its cholesterol drugs Vytorin and Zetia, Schering-Plough is still in need of efficiencies as it tries to recover from big product losses.
Its blockbuster, the decongestant Claratin, lost patent protection three years ago and, like every major drugmaker that has seen its top sellers go off-patent, including Merck and Pfizer, Schering-Plough is responding by boosting R&D spending while eliminating manufacturing overcapacity.
The company said 550 regular full-time positions will be lost from its Manati site in Puerto Rico, which makes allergy nasal spray Nasonex and nasal decongestant spray Afrin.
The plant will close by the end of the year, so production of Nasonex will be made exclusively in New Jersey, while the manufacturing of Afrin will be moved to Tennessee.
Fifty jobs will also go from Schering-Plough's other manufacturing site in Las Piedras, leaving behind 475 employees to make Zetia, allergy medication Clarinex and hepatitis drug Rebetol.
Another 500 regular full-time positions will be eliminated in New Jersey between the Kenilworth and Union sites, where dry powder asthma inhaler Asmanex and allergy pill Claritin, among other products, are produced by a workforce of 7,500.
The implementation of the job cuts, including severance packages, is expected to set Schering-Plough back by $235m to $260m but deliver annual savings of $100m starting in 2007.
"We are streamlining our global supply chain because volumes were not high enough for our staff to be fully utilised," Schering-Plough Rosemarie Yancosek told In-PharmaTechnologist.com.
The announcement of the redundancies in Puerto Rico and New Jersey comes four years after Schering-Plough had to fork out $500m in a consent decree with the US Food and Drug Administration (FDA), the highest monetary settlement in the agency's history.
The government sought this money to disgorge profits made by the company on drug products that were produced over the last three years prior to entry of the decree in violation of current good manufacturing practice (cGMP) regulations related to facilities, manufacturing, quality assurance, equipment, laboratories, packaging and labelling.
In response, Schering-Plough had to take up measures involving costly upgrades to ensure compliance, a move the company now says is unrelated to the announced job cuts.
At the start of 2006 the company announced it had completed all of the 212 significant steps and 30 validation actions required by the FDA in relation to the violations of cGMP.
The recent job cuts represent a 3.3 per cent reduction of Schering-Plough's 32,000-strong workforce around the world.