Valeant has said it will cut 10 to 15 per cent of its workforce after the completion of its $8.7bn acquisition of eyecare specialist Bausch + Lomb (B+L), which is now expected to occur in early August.
The fast-growing Canadian pharma company revealed its plans in a letter to its staff in which it also said it would remain based in Laval, Quebec, but would relocate B+L’s corporate headquarters from Rochester, New York, to New Jersey.
Valeant also said it would retain all current production facilities in the US, including B+L’s Rochester plant which “is an important site given its manufacturing and R&D capabilities”.
The number of jobs shed as a result of the downsizing could be between 1,850 and 2,775, according to estimates based on the current headcounts of both companies, and will affect staff employed both in North America and elsewhere in the world.
B+L’s three businesses -contact lenses, pharmaceuticals and eye surgery products – will also be combined into one unit, said Valeant, which added that it wants to “eliminate the global structure and to reduce significantly the regional structure currently in place” at the company.
The letter from Valeant chief executive Mike Pearson, which was also filed to the US Securities & Exchange Commission (SEC), notes that the company expects to achieve around $800m in cost savings during the integration of B+L, with $500m realised in 2013 and the rest coming in 2014.
“We will continue to apply a low margin operating mindset to high margin businesses,” said Pearson, who said the corporate staff of the combined business will number less than 100 people.
Having already broken into the top 15 pharma companies by market capitalisation earlier this year, Pearson said: “Today, we start on the next step of our journey – to become the most valuable healthcare company in the world”.
Valeant has pursuing a strategy of growth by acquisition over the last few years, concentrating on speciality business in areas like dermatology, ophthalmology, dental and over-the-counter (OTC) medicines.
Last year it snapped up skincare company Medicis in a $2.6bn deal that added Botox rival Dysport (abobotulinumtoxin A) to its portfolio along with a range of wrinkle treatments, and it also paid $345m for Johnson & Johnson’s Ortho Dermatologics and $425m for Sanofi’s Dermik skincare business.
Pearson said that, going forward, its objective is to maintain at least 5 per cent organic growth and 20 per cent overall growth rates for the business, and would “enter and exit markets over time” to achieve that goal.