Takeda Pharmaceutical Co. (4502), Asia’s biggest drugmaker, plans to eliminate about 9 percent of its workforce over the next four years to integrate Nycomed, the Swiss company it’s targeting to spur profit from an 11-year low.
Takeda will cut 2,800 jobs, mainly in Europe and the U.S., to help yield net savings of about 130 billion yen ($1.7 billion) by the year ending March 31, 2016, the Osaka, Japan- based company said yesterday. The drugmaker said costs associated with the plan will trim 35 billion yen from net income in the current financial year, forecast in November to plunge 31 percent.
European units may be merged or sold as part of the integration of Nycomed, bought for 9.6 billion euros ($12 billion) in September. The Zurich-based company may help buffer Takeda (4502) from a slump in sales of Actos, the bestselling diabetes drug that will face competition from generic copies next August.
“I’m not fully convinced by the restructuring plan,” said Fumiyoshi Sakai, a health-care analyst at Credit Suisse Group AG in Tokyo. “I’m not sure that it’s enough,” he said in an interview. He has a “neutral” rating on Takeda shares and expects them to fall to 3,000 yen over the next 12 months.
Takeda (4502) advanced 1.3 percent to 3,225 yen in Tokyo trading as of the close at 3 p.m., the biggest increase in four weeks. The benchmark Topix index gained 0.8 percent. The shares have lost 19 percent of their value over the past year, almost matching the 21 percent drop in the Topix.
The earnings outlook for the next fiscal year is uncertain because of a sharp drop in Actos sales in Japan and the threat of copycat medicines, Sakai and colleague Toshiyuki Tateno said in a report yesterday.
“The rationalization measures are likely to produce quick results, but the impact on net profit is uncertain,” they wrote. The announcement may “spark a brief rally, but it remains to be seen whether the announced measures alone will be enough to turn around performance” from April 2013.
Takeda had more than 30,000 employees as of Sept. 30, bolstered by the acquisition of Nycomed, which gave it customers in 42 more countries and reduced reliance on sales in Japan and the U.S., where first-half revenue declined 10 percent because of the stronger yen.
“While our combined operations in more than 70 countries are more complementary than overlapping, there are a number of areas where we will need to make changes to ensure efficient and flexible operations,” Takeda President Yasuchika Hasegawa said in a statement yesterday.
More guidance on the financial impact of the restructuring plan will be given when Takeda reports third-quarter earnings on Feb. 1, the company said. The plan includes the elimination of 2,100 jobs mainly in Europe and 700 in the U.S. across research, commercial, operations and administrative functions, Takeda said.
About 1,200 Takeda and Nycomed workers are affected in Germany, most of which are in Konstanz, according to a joint statement by IG BCE, a chemicals and energy trade union, and the local workers’ council. Most of the employees in Konstanz are in research and development, the statement said.
The unions called the job cuts “a huge mistake” and are planning a protest in Konstanz on Jan. 24, the statement said.
Cost savings in Europe are pegged at 40 billion yen for fiscal 2014, 10 billion yen more than a May forecast, Takeda said yesterday.
Takeda cut its profit forecast in November by 32 percent to 170 billion yen for the current fiscal year, the lowest since 2001. It’s expected to report net income of 194 billion yen, according to the average of three analyst estimates compiled by Bloomberg in the past four weeks.
“It’s still unclear to me how Takeda can make the best out of the Nycomed acquisition in terms of earnings,” Atsushi Seki, a health-care analyst at Barclays Plc based in Tokyo, said by telephone yesterday. “It’s hard to see what will be the driver for growth going forward.”
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