June 26, 2012 / 4:44 PM / in 6 years

Roche revamps research ops, cuts 1,000 U.S. jobs

ZURICH/NEW YORK (Reuters) - Swiss drugmaker Roche Holding AG ROG.VX said on Tuesday it was overhauling its research operations by closing the 80-year-old New Jersey facility where Valium was discovered, cutting 1,000 jobs and replacing its drug research chief.

A logo of Swiss pharmaceutical company Roche is pictured in front of a company's building in Rotkreuz, April 12, 2012. REUTERS/Michael Buholzer

Jean-Jacques Garaud, head of pharmaceutical research, will leave the company at the end of this week, Roche said. He will be replaced by Mike Burgess, head of cancer drugs.

Roche will also shutter its 127-acre Nutley, N.J.-based campus and move those activities to Germany and Switzerland, a consolidation aimed at curbing drug development costs. The sites in Switzerland and Germany are expected to add about 80 jobs, the company said.

The campus, site of Roche’s U.S. headquarters for many decades, includes the research facility that gave the world the groundbreaking anti-anxiety drug Valium, which between 1969 and 1982 was the most widely prescribed medicine in the United States.

The moves “will free up resources that we can invest in these promising clinical programs while also increasing our overall efficiency,” Roche Chief Executive Severin Schwan said in a statement.

The move allows Roche to keep its research and drug development costs largely unchanged, despite an increase in clinical research projects in the last 18 months, Schwan said.

Roche did not give a reason for the management changes. Last month, the company halted its clinical trials of dalcetrapib — one of several new treatments being developed by drugmakers aimed at boosting levels of “good” HDL cholesterol — a move that sent the shares sharply lower.

Last September, Garaud said the experimental drug, which raised HDL substantially in a Phase II trial, had the potential to generate annual sales of $10 billion. [ID:nS1E78M0U8] Garaud’s secretary said he was traveling and unavailable for comment.


Industry investors have clamored for a better return on research investments as drug makers lose billions of dollars in sales to cheaper generic versions of their top products in recent years. Pfizer Inc (PFE.N) and AstraZeneca (AZN.L) have made particularly sharp cuts to their R&D operations.

Pfizer last year set a goal of slashing up to $2 billion from its annual R&D budget that includes cutting thousands of research jobs and closing several laboratories. AstraZeneca in February announced 7,300 job cuts and the closing of a major research facility in Sweden.

Roche said it will disclose costs to close the Nutley campus on July 26, when it reports results for the first six months of the year. Roche said its 2012 financial outlook remains unchanged.

Roche employs 20,800 people in the United States. In 2011, the company had more than 80,000 employees worldwide, it said.

The company is seeking a location on the U.S. east coast for a clinical research center expected to employ about 240 people. That operation would support U.S.-based clinical trials and handle interactions with health regulators.

Investment into research by South San Francisco, Calif.-based Genentech, Roche’s U.S. biotechnology unit, will not be affected by the overhaul, Roche said.

Genentech is largely responsible for discovery and early stage development of Roche medicines. Many of Roche’s top-selling products, including the blockbuster cancer medicines Avastin and Herceptin, were developed and produced by Genentech.

Additional reporting by Lewis Krauskopf in New York; Editing by Jon Loades-Carter, Michele Gershberg and M.D. Golan

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