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King cuts jobs after loss of Altace patent extension

  • US-based King Pharmaceuticals will cut 20 per cent of its 2,600 employees after a federal appeals court judge ruled against a patent extension on the company's best-selling blood pressure drug, Altace.

US-based King Pharmaceuticals will cut 20 per cent of its 2,600 employees after a federal appeals court judge ruled against a patent extension on the company's best-selling blood pressure drug, Altace (ramapril).

The announcement results from a court ruling in September 2007 which denied King a longer patent the drug. The decision permits generic manufacturers to develop and sell cheaper versions without the worry of a legal battle.

King will begin the layoffs in December 2007, with most being pruned from its sales force in Bristol, according to spokesman James Green. The company says it will save USD 75m to USD 90m in 2008 as a result.

Starting on 22 October 2007, employees will be individually notified of their termination, with all the cuts completed by the end of 2007. All employees will receive 60-day notices and benefits, including severance pay and health care.

Altace is King's best-selling drug and racked up sales of USD 163m in Q2 FY07, compared with USD 154m in Q2 FY06. The patent runs out on 29 October 2008.

King has filed a petition seeking reconsideration of the ruling, claiming the court was in error. The company now plan to refocus efforts on developing medicines for the neuroscience and hospital/acute care division, including Thrombin-JMI and Epipen.

King's CFO, Joseph Squicciarino, said of the workforce cuts: "We believe the expense reduction measures announced will enable us to continue generating strong cash flow to invest in our pipeline and business development opportunities, further strengthening our neuroscience and hospital/acute care platforms."

On 18 October 2007, King's stock fell USD 0.13 to close at USD 10.72.

 

30th September 2008

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