Roche Diagnostics to lop off 170 jobs in restructuring

Roche Diagnostics COO Roland Diggelmann

Roche ($RHHBY) is plotting to dissolve its applied science business, axing 170 jobs in the process and shifting what's left into the rest of its diagnostics arm.

The decision follows the slow decline of Roche's research-use technology business, as applied science slumped another 10% last quarter thanks to discontinued products and cuts in research funding around the world, Roche said. The company plans to fully dissolve the business by the end of the year, cutting 110 jobs in Germany and another 60 in Branford, CT.

Life sciences sales still account for about 7% of Roche Diagnostics' business, and the company plans to keep its profitable polymerase chain reaction technology and nucleic acid product lines, COO Roland Diggelmann said, transferring them to the molecular diagnostics unit.

"After thoroughly reviewing the activities of our applied science business area, we concluded that reorganizing our life science business will allow us to fully leverage the synergies these products have with our existing clinical diagnostic portfolio," Diggelmann said in a statement. "Roche remains committed to the life science business, and we will continue to serve our customers with our existing life science portfolio and experts in the field."

Roche is also getting out of its agreement with DNA Electronics, designed to develop a semiconductor-based sequencing system, and nixing its partnership with IBM to create a nanopore-based sequencing platform. In both cases, Roche sees a high front-end risk in a tough market.

Furthermore, Roche will shift all of its genetic sequencing know-how into a dedicated business unit, tasked with implementing new technology in both research and clinical diagnostics.

The move is part of Roche's ongoing efforts to get the most out of its swelling diagnostics business. The company's professional and tissue diagnostics units have soared over the past year, but continued struggles in diabetes and applied science dragged down revenue in the first quarter, and the overall business grew just 1%.

But Roche has hardly been sitting on its hands, last year announcing a broad restructuring of its diabetes business designed to rebound in a tough market, and now reformulating applied science to make the business more efficient.

- read Roche's announcement