Pierre Fabre plans deep cuts to R&D, shedding hundreds of jobs

Unhappy with declining drug sales and diminishing returns on R&D, French drugmaker Pierre Fabre is planning to slash 551 jobs, shifting the balance of its business away from pharmaceuticals.

The company plans to trim its R&D workforce by about 31%, cutting 272 researchers jobs by 2016 with the majority of layoffs in its native France. Pierre Fabre also intends to slash its sales staff by more than 40%, ditching 279 workers in the process.

The problem, Pierre Fabre said, is that its prescription drug business is weighing down the rest of its operation, which focuses on cosmetics and consumer healthcare. Since 2009, the company's drug revenue has fallen by about €100 million ($124 million), Pierre Fabre said, and, facing an unfavorable regulatory environment and mounting generic competition, management sees a need for downsizing.

Pierre Fabre's new, streamlined R&D model will focus on three key areas--oncology, neuroscience and dermatology--that the company believes can deliver near-term growth.

Potentially standing in the way of Pierre Fabre's vision for a slimmer future is French President François Hollande and an administration that has repeatedly sparred with multinational companies trying to cut jobs in the country. Sanofi ($SNY) endured a protracted standoff with the government over its plans to close down a Toulouse R&D site, a fight that ended with the French company agreeing to it hand over to German collaborator Evotec as part of a larger deal.

Bertrand Parmentier

But despite Pierre Fabre's planned cuts, the company has no intention of losing its French accent, Managing Director Bertrand Parmentier said.

"I fully appreciate the importance of the period that our 'house' is about to experience," Parmentier said in a statement, care of Google Translate. "In these difficult and challenging times for all, we have to the heart to help each affected employee bounce back in a new professional project. Pierre Fabre continues to conduct all its research and manufacturing in France, notably in the Southwest and particularly in the Tarn, which has always been and will remain our anchor territory."

- read Pierre Fabre's statement (in French)