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Daiichi plans its second big round of US job cuts this year

pic thx to brittgow flicker creative commons [1]

pic thx to brittgow flicker creative commons

Big job cuts by drug makers have not made much news lately, given the bloodletting of the past few years that shrunk the pharmaceutical industry considerably. But Daiichi Sankyo is issuing a reminder how tenuous fortunes can be in this volatile sector.

The Japanese drug maker plans to eliminate anywhere from 1,000 to 1,200 jobs in its US commercial operations over the next several months. The cuts include an unspecified number of sales reps across the country as well as other positions in its US headquarters in Parsippany, NJ. The cuts are not expected to involve R&D operations based nearby.

This is the second time this year that Daiichi has sought to lower its US headcount. Last spring, the drug maker slashed jobs about 16 percent of the workforce in its US commercial operations, not long after Daiichi agreed to sell its stake in Ranbaxy Laboratories, the troubled generic drug maker to Sun Pharma. Specific numbers were not disclosed, but a Daiichi spokeswoman told us the drug maker currently employs about 2,400 people in the US.

In explaining the latest move, which was disclosed late last week, Daiichi cited a planned pivot toward developing and selling more specialty medicines, as opposed to primary care drugs. What’s more, its biggest seller, the Benicar blood pressure medication loses patent protection next year. The drug reportedly generated nearly $2.6 billion in sales last year, or about a quarter of its annual revenue.

The cutbacks reflect “the macro changes in the US health care system that place a greater emphasis on managing the needs of patients with more complex health care needs,” said Ken Keller, who heads Daiichi operations in the US, in a statement [2].

To what extent new products can help Daiichi compensate any time soon remains unclear. The FDA approved a Daiichi blood thinner called Sayvasa earlier this year, but its sales potential is uncertain, given that the product carries a so-called boxed warning – an alert about serious side effects in some patients.

For the moment, the US pharmaceutical industry has cut fewer jobs this year [3] than in 2014, according to Challenger, Grey & Christmas, an outplacement firm. Through September, the number of jobs lost was approaching 6,700, much less than the nearly 10,000 tracked for the same period last year.

Still other drug makers have disclosed job cuts in recent weeks, by the way. Kythera Pharmaceuticals, which is being bought by Allergan, and Onyx Pharmaceuticals both announced planned job losses of about 120 and 380, respectively. Although these numbers are not encouraging, other companies are regularly hiring, mostly in dribs and drabs. So reasons for optimism may not always be widely known.