BMS Cuts Bloated Manufacturing Arm to Bolster R&D

Dec 12, 2007
By Pharmaceutical Executive Editors

Last week, in response to a dwindling pipeline and rising development costs, Bristol-Myers Squibb announced a major reorganization plan that would see nearly half of its manufacturing plants closed and about 4,300 workers unemployed.

The main cuts will come at the manufacturing level:

  • brands in the company's mature-products portfolio will be reduced by 60 percent between 2007 and 2011
  • the number of manufacturing facilities will drop 50 percent by the end of 2010
  • total headcount will decrease approximately 10 percent between 2007 and 2010.

"These cutbacks are very healthy, very wise, and very long overdue in this industry," said Tom Ruff, president and CEO of headhunting firm Tom Ruff Company and author of How to Break into Pharmaceutical Sales. "Many pharma companies are now following the lead of Toyota with a lean manufacturing plan. It?s the production of goods using less of everything. All the machines that are sitting around, inventory, time—there is a lot of waste there."

At BMS, the key words being bandied about are simplify and streamline. According to its press statement, the company is going after new products in previously untapped medical areas, and it will adjust its manufacturing system as new processes are put in place. This includes the company?s recent purchase of the AdNexus protein development system, reported by Pharm Exec in October.

The company hopes to boost its R&D and late-stage pipeline with an array of drugs in the areas of oncology, diabetes, and cardiovascular disease states.

"The fundamental problem right now is that we don?t have enough innovation or enough drugs coming through, and if that is the present challenge in the industry, then the challenge for executives is to figure out what can they do to transform the organization to focus on R&D and innovation," said Ian Wilcox, VP and pharma industry sector head at Hay Group.

"Unless you are in biopharma or genomics, where the manufacturing process is proprietary and highly complex, everyone else is talking about innovation and R&D, which is how companies will compete globally," Matt Gurin, VP of building effective organizations practice at Hay Group concurred.

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