Roche: Battling Competition from Itself
Less than a month after a U.S. panel rejected the use of Roche’s Avastin in breast cancer, the company is fighting two Democratic senators’ efforts to expand its use as a low-cost option for an eye disease. Herb Kohl of Wisconsin and Sherrod Brown of Ohio are asking Medicare to declare Avastin necessary to fight macular degeneration. This “off label” application eats into sales of Roche’s Lucentis, an approved drug for the condition that’s 40 times more expensive. According to one study, Avastin saved Medicare $800 million in 2008. Roche points to two other studies, one of which it funded, that show this use of the drug increases the risk of stroke and death in seniors.
U.S. Postal Service: Losing Money, Closing Branches
The U.S. Postal Service says it may close as many as 3,700 of its nearly 32,000 branches as it seeks to cut costs ahead of reaching a $15 billion borrowing limit. The USPS reported a loss of $2.6 billion for the quarter and could run out of money by September. Post offices in every state but Delaware are on the list of potential closures, which would save $200 million a year. The Postal Service is also seeking permission from Congress to delay a required payment for future retiree health-care costs and to end Saturday mail delivery.
Dow Chemical and Saudi Aramco: Join on a $20 Billion Plant
Dow Chemical and Saudi Arabian Oil approved a plan to build a $20 billion petrochemical plant at the Persian Gulf port of Jubail. The venture, scheduled for completion in 2016, will have capacity to make more than 3 million metric tons of chemicals annually. Saudi Arabia, like the United Arab Emirates and other Gulf oil producers, is seeking to expand beyond producing basic petrochemicals to plastics and other higher-value goods in an effort to lessen dependence on exports of raw crude.
Research In Motion: BlackBerry Maker Cuts Jobs
Research In Motion, maker of the BlackBerry smartphone, plans to cut 2,000 jobs, or about 10 percent of its workforce. The company is losing market share in the U.S. to the iPhone and handsets running Google’s Android software, in part because RIM hasn’t introduced a major new BlackBerry model since August 2010. Cheaper Google phones are also making inroads in Latin America, Asia, and Europe. Investors have pushed for broader changes at the top of the Waterloo (Ont.) company.
UBS: Lowering Expectations
UBS, Switzerland’s largest bank, scrapped its profit target for 2014 and announced cost cuts after second-quarter net income dropped 49 percent. The investment bank plans to cut costs by as much as $2.5 billion over the next two to three years. In the past two years, UBS hired more than 1,700 people and brought in new business heads. In the first quarter it reversed course and cut jobs by about 6 percent. Now it may slash 700 more positions, according to a source familiar with the situation.