Roche May Make Sweeping Job Cuts

Beset by declining profits, setbacks in new-drug development, and the surprise purchase of nearly a 20% stake by Swiss rival Novartis A.G., Roche Holdings A.G. (Basel, Switzerland) is soon expected to reduce its workforce by as much as 12%, according to industry analysts. Roche is the fifth largest drug company in Europe.

Roche has already made some cost-cutting moves, such as a ban on hiring and putting projects on hold. However, the uncertainty of the company's position at this time suggests that more cuts may be on their way. Lackluster profits and the dearth of new products have already taken their toll on the company's stock, which has fallen 16% this year. Recent executive changes have only added fuel to industry speculation. An interview on May 13 with a Swiss newspaper quoted Franz B. Humer, chief executive, as saying, "I cannot today rule out a reduction in jobs on a global level.”

Dealing with the Novartis coup is another matter Roche must contend with. Novartis has indicated it would entertain the idea of a merger, but the staunchly independent leaders of Roche stoutly resist the idea, saying only that the company will consider cooperating with Norvartis, as it does with other pharmaceutical firms.