Earlier this week, Schering-Plough Corp. announced that it would shed 5,500 jobs.
Although if you read the Kenilworth, N.J. drug company’s press release you would not find that number anywhere.
That’s because shrinking the workforce is only one part of what Schering-Plough is proposing to do. Rather, it has launched a “Productivity Transformation Program.”
I’d call it “restructuring.” But then, that’s because it offends me when companies “brand” their schemes to overhaul their operations.
Schering-Plough is under pressure because its collaboration with Merck & Co. Inc. on the Zetia and Vytorin cholesterol medications was blasted by cardiologists at a conference over the weekend. Vytorin failed a key clinical test, and analysts speculate that sales will continue to dwindle.
Across the pharmaceutical industry, when there’s a big hit to sales, companies cut their overhead to run lean until they find that magic blockbuster pill. That’s what Merck did after it withdrew Vioxx in 2004. CEO Richard Clark called his make-over “Merck’s Plan to Win.”
So Schering-Plough CEO Fred Hassan had to do something besides reaching for his Crisis Management Book of Euphemisms.
His “Productivity Transformation Program” includes eliminating management layers, consolidating middle management, cutting travel costs, shelving some research projects, and reducing the number of factories.
That’s more than just layoffs, I know. But when the goal is to produce $1.5 billion in annual savings, heads will roll. In this case, up to 10 percent of the company’s 55,000 employees.
Productivity sounds like it will be transformed. But it will take a few years to see if it’s for the better or worse.