News Articles Text Version

Date 6/11/2005
News Source The Advocate
Headline Purdue Pharma to cut work force by half
Article Text Purdue Pharma to cut work force by half By Richard Lee and Jim Zebora Staff writers June 11, 2005 Stamford's Purdue Pharma, which Tuesday lost an appeals court effort to halt sales of a generic version of the painkiller OxyContin, will lay off half its 2,100 employees and take other steps to cut costs as a result of the ruling. "We are left with no other options, given the drop in revenues that we are projecting," Purdue Pharma President and Chief Executive Officer Michael Friedman said in a statement. The privately held pharmaceutical company derives more than 75 percent of its revenues from the controversial drug, whose sales totaled $1.84 billion in 2004, according to Fairfield-based drug industry researcher IMS Health. Purdue employs about 720 people in Stamford and 2,154 in the United States. The current estimate is that 50 percent of the total staff will be cut, though that could vary slightly, said spokesman Robin Hogen. "In some locations it will be more than 50 percent, in some it will be less," Hogen said. He declined to predict the exact number in Stamford. The layoffs have not yet started, but will be completed by the end of the month, Hogen added. Purdue Pharma slashed 291 city jobs in April 2004, shortly after losing its first legal battle over generic versions of OxyContin. In January 2004, U.S. District Court Judge Sidney Stein in New York ruled the patents Purdue received for OxyContin in 1996 and 1997 couldn't be enforced because the company had misled the federal patent office, saying the drug was unique because it was effective in very low dosages. A three-judge appeals panel agreed with Stein this week, ruling that, "Purdue had no clinical evidence supporting its claim at the time it was made or at any time before the patents issued." The company will ask the full 12-member appeals court to review the decision. However, Endo Pharmaceutical Holdings Inc. of Chadd's Ford, Pa., said it would immediately start selling its generic version of the time-released painkiller in three strengths. Reduced-cost generic drugs are great for consumers, causing drug prices to drop by a third or even half, but they can erode sales quickly for the company that produced the drug they are copying, industry experts say. Prozac is one example. The antidepressant that Indianapolis-based Eli Lilly & Co. makes lost 80 percent of its market share within two months after it lost patent protection in August 2001, according to the Department of Health Care Policy at Harvard Medical School. Stamford Mayor Dannel Malloy said Purdue officials told him Wednesday there would be significant job losses at the company, which relocated to the city five years ago from Norwalk. "No one at the company is surprised these steps are being taken," Malloy said. "The company has to begin repositioning itself with new product lines." The mayor said he was confident that Purdue workers laid off in Stamford will find new jobs. "It is a very hot job market and those are extremely qualified employees who will be snapped up," Malloy said. Hogen said there is be a possibility that some may be rehired, but he didn't want to give employees any false hope. "We had a layoff last April (2004) and we hired some back. It was related to the same issue -- generic competition. We found that we couldn't survive without some of them," Hogen said. Employees leaving the Purdue Pharma shuttle at the Stamford train station last night declined to comment about the layoffs. The company has facilities in New Jersey, North Carolina, Rhode Island and New York state. Manny Ratafia, chief executive officer of Technology Management Group in Woodbridge, which follows the pharmaceutical and biotech industries, said generic competition doesn't mean the end of Purdue Pharma. OxyContin will still be purchased by the public, he said, and the company still has a strong name. "We don't know what they have in the pipeline. They can still be profitable and remain in business," he said, noting that the profit margin for drug products is higher than in other industries. Purdue Pharma has been a good corporate citizen and a responsible player in the pharmaceutical industry as it has defended itself in numerous court cases across the country filed by drug abusers claiming harm from OxyContin, said Christopher Bruhl, chief executive officer and president of the Business Council of Fairfield County. Michael Friedman, Purdue president and chief executive officer, is the business council's chairman of the board. "This is more than a sad day. It makes me personally angry," Bruhl said. "It's a good company that's doing the right thing. On the human level, our hearts go out to the Purdue family." The business council will do its best to support Purdue in its appeals, he said, calling Oxycontin a break-through in pain management that has helped millions. -- Special correspondent Alexandra Fenwick contributed to this story.