Is there a connection between Bristol Myers Squibb’s announcement that it will reduce its headcount by 6% and the company’s recent acquisitions of Karuna, Mirati and RayzeBio?
This week, several Big Pharma companies reported first-quarter 2024 financial results. Biogen beat Wall Street’s profit expectations and reported a spike in the uptake of its Alzheimer’s disease therapy Leqembi, and Novartis raised its 2024 outlook on strong drug sales. Meanwhile Roche’s Q1 sales slipped due to a continued drop in demand for COVID-19 products and the appreciation of the Swiss franc. However, the biggest news of the week was Bristol Myers Squibb’s announcement that it will reduce its headcount by 6%, laying off approximately 2,200 employees, or nearly 30% of all biopharma jobs lost so far in 2024, according to BioWorld.
Under a “strategic productivity initiative,” the BMS restructuring includes trimming its pipeline and is intended to save the company $1.5 billion in costs by the end of 2025. As is always the case with such large-scale layoffs, the human cost is devastating, with employees in New Jersey and elsewhere already losing their jobs. These are difficult times for the biopharma industry, with layoffs continuing to hit small and large companies on a regular basis.
Other companies besides BMS have also implemented sweeping cost-cutting measures. In July 2023, Biogen adopted a “Fit for Growth” program targeting around $1 billion in operating expense savings by 2025, which included eliminating approximately 1,000 jobs, or about 11% of its workforce. Apparently, Biogen’s efforts are paying off. On Wednesday, CEO Christopher Viehbacher attributed the company’s strong Q1 performance in part to “the realization of meaningful cost savings.”
In the case of BMS’ cost-saving measures announced on Thursday, how these will play out as the company looks to reduce $1.5 billion in costs by the end of 2025 remains uncertain. William Blair analysts in a Thursday note to investors wrote that the path forward “could involve more bumps along the way over the next two to three years.”
BMS CEO Christopher Boerner said in a Thursday call with analysts that saving $1.5 billion by the end of 2025 “will allow us to reinvest in high-priority growth brands and R&D programs.” CFO David Elkins added that laying off 2,200 employees will help BMS “become more agile” and “streamline the organization by removing layers of management,” leading to quicker decision-making.
Boerner, who became CEO in November 2023, helped BMS make some big decisions with a quick succession of acquisitions. In December 2023, the company acquired Karuna Therapeutics for $14 billion and RayzeBio for $4.1 billion. Preceding those buys, BMS in October 2023 purchased Mirati Therapeutics for up to $5.8 billion. In the case of Mirati, BMS is laying off the majority of that company’s workforce—more than 400 employees—over the next year, according to reporting by the San Diego Union-Tribune.
While BMS on Thursday did not provide details on the 2,200 jobs it is axing, these positions no doubt include people from Karuna, Mirati and RayzeBio. As STAT News noted, with the release of its Q1 results and restructuring plans, BMS “showed the price for those acquisitions.”
Greg Slabodkin is the news editor at BioSpace. You can reach him at greg.slabodkin@biospace.com. Follow him on LinkedIn.
