Will Roche Job Cuts Include China Positions?

| About: Roche Holding (RHHBY)

Roche Holding AG (OTCQX:RHHBY) is planning to make “massive” job cuts soon, according to newspaper reports, involving “more than several hundreds” of employees around the world including positions in sales, R&D, production and administration. The reduction in employee counts comes at the same time Roche is expanding in China.

The reports said decisions about the cuts would be made this week, which Roche spokespersons denied, though they did not quarrel with the underlying story that the company plans to reduce costs by shrinking its total staff.

Roche started operations in China in 1988 and formed its first China JV in 1994. In 2004, the company opened an R&D center in Shanghai focusing on drugs for oncology and virology. Three years later, Roche announced a second Shanghai R&D center. This $100 million facility was designed to be completely self-sufficient, capable of taking a drug aimed specifically at the China market from discovery through regulatory approval.

In 2008, Roche opened an Asia partnering office in Shanghai’s Zhangjiang Hi-Tech Park. It has an on-going relationship with BioDuro for discovery chemistry.

Roche has been pursuing a “high-end” drug strategy, focusing on innovative, often expensive patented drug such as its cancer drug, Avastin. Other multinationals are seeking to take advantage of the expected growth in generic or vaccines drugs among China’s population, as healthcare reform brings drugs to China’s underserved rural and urban poor.

The company’s diagnostic division has also been a standout performer in recent years. Its revenues are growing by 50% annually, a trend Roche expects to continue.

All of this growth does not mean that Roche China will be spared all job cuts, but frankly, we’d be surprised if there was much in the way of firings in the company's China staff.

Disclosure: none.