This might hurt a bit.
With a prescription of stock buybacks failing to boost its vigor on Wall Street, IMS Health Inc. is cutting 10 percent of its work force, which at last count numbered more than 7,600 people.
Announced fresh off the holidays, it was IMS Health”™s first major layoff since 2004, when it cut 600 jobs in the U.S. and Europe.
At last report the company had about 75 employees at its Norwalk headquarters.
IMS Health collects sales data on most prescription drugs sold in the U.S. and in many countries, and sells the information to pharmaceutical companies and others in the health care industry. Corporate clients in turn use the information to decide whether to launch products and to arm their sales forces with competitive information.
The U.S. pharmaceutical industry has been in a state of flux, with shares of Pfizer Inc. bottoming out at their lowest levels in more than a year.
For some, however, the cuts might be a hard pill to swallow: David Carlucci, IMS Health”™s chairman and CEO, raked in $7 million in compensation in 2006, and over the first nine months of its current fiscal year, the company racked up $216 million in profits.
What”™s more, IMS itself predicts growth of between 5 percent and 6 percent for the global pharmaceutical market.
“With these actions, we are positioning ourselves to reflect market realities and are adjusting our cost structure ”“ aiming for greater simplicity, fewer management layers, faster decision making, and a sharper focus on addressing clients”™ new priorities,” Carlucci said.
The company estimates it will pay up to $90 million in termination benefits, and says it will save at least $55 million annually as a result of the restructuring. Among other actions, IMS Health plans to streamline its consulting practice areas and accelerate the adoption of business process outsourcing services for clients. It also plans to consolidate production processes in several unspecified locations and “right-size” in its words support functions in marketing, finance and administration.
The company indicated it will provide an update at the end of January.
The news of the layoffs broke even as IMS Health reveled in a court victory in Maine. A federal judge sided with IMS and competitors Wolters Kluwer Health and Verispan L.L.C., ruling that a new state law that limited the companies”™ access to physician prescription data violated the First Amendment protecting free speech.
The companies are fighting a similar law in Vermont. Earlier this month in Washington, D.C., officials were on the brink of enacting the so-called SafeRX Act with a similar goal.
Walters Kluwer Health, a subsidiary of a Netherlands company, has its headquarters in Pennsylvania, as does Verispan. That happens to be where IMS Health has its headquarters for the Americas, in Plymouth Meeting where it reportedly employs more than 1,000 people.
Founded in 1954 as Intercontinental Marketing Services, IMS was acquired in 1988 by Dun & Bradstreet for $1.8 billion. After D&B renamed itself Cognizant, the company spun IMS and sister division Nielsen Media Research back out in 1998 as independent, publicly traded companies. IMS subsequently divested Gartner Inc.
