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Company

Allergan to cut more than 1000 jobs

02/02/2018
Pharmaceutical multinational Allergan will lay off more than 1,000 jobs in an effort to cut costs in anticipation of increased competition for important dry eye drug Restasis.

The cuts are equivalent to 5% of its 18,000 strong workforce and are aimed at saving around US$300–400 million (AU$377–502 m) on annual operating costs. Allergan will also eliminate 400 positions that are currently open.

The lay offs follow a concerted, yet failed effort by the company to protect patents surrounding Restasis, which generated around US$1.5 billion (AU$1.88 b) in sales in 2016.

Notably, Allergan tried to shield review of the patents by making a controversial deal with a Native American tribe in September, but this only succeeded in drawing condemnation from lawmakers and rival drug companies alike.

A ruling one month later by a Texas federal judge invalidated Restasis’ patents, paving the way for generic rival products to hit shelves as early as next year.

According to Reuters, the positions most affected by the cuts will be those that focus on products and categories where the company has or expects to soon lose exclusivity.

While the move will incur savings in the long term, the company said it expected to take a US$125 million (AU$155.9 m) hit from the cuts, primarily due to severance, the majority of which would be recorded in the fourth quarter of 2017.

Allergan announced last November that it recognised the need to adjust operating expenses on order to see revenue earnings growth by 2019. Financial analysts estimated the company had revenues of US$15.9 billion (AU$19.97 b) in 2017 and a net income of around US$5.8 billion (AU$7.28 b).

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