Roche Aims to Cut Costs and Raise Productivity

Sep 09, 2010

On Sept. 3, 2010, Roche (Basel) launched a groupwide operational-excellence initiative intended to modify the company’s cost structures and accelerate its productivity improvements. Under the initiative, all parts of the company will analyze their respective structures and processes. By the end of the year, the company will decide what measures it will take and evaluate their potential effects on staffing levels. Roche plans to implement its operational-excellence initiative during 2011 and 2012.
In a press statement, Roche cited mounting pressures to curb healthcare costs in the United States and Europe as one reason for the initiative. Recent disappointments in Roche’s late-stage pipeline, including the discontinuation of the clinical-development program for the rheumatoid-arthritis drug ocrelizumab, also prompted the initiative, according to the statement. The company expects healthcare payers to respond to tight budgets by selecting the treatments and diagnostic tools that offer the highest medical value for patients. Thus, an additional goal of the operational-excellence initiative will be “setting the right priorities to ensure a successful future,” according to the statement.
“We have launched this initiative from a position of strength,” said Severin Schwan, Roche’s CEO, in the press statement. “By contrast with many of our competitors, we are only marginally affected by patent expiries. Furthermore, despite the recent setbacks, we have one of the strongest research-and-development product pipelines in the industry. We will focus our resources toward investments that will drive innovation and ensure the company’s long-term success, while at the same time protecting our profitability so as to safeguard our financial flexibility.” In the statement, Schwan confirmed Roche’s full-year outlook for 2010.
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