In the third week of November, Germany's Bayer announced a major restructuring program designed to offset falling revenues resulting from generic drug competition and price pressures stemming from financially ailing governments' imposition of healthcare reforms. Bayer hopes to, by means of this thoroughgoing restructuring, free up resources to invest in growing and enhancing the company with a focus on R&D and marketing new products.
Spokespersons for Bayer said that the pharmaceuticals/chemicals giant will cut costs, from 2013 on, by EUR800 million per year, eliminate 4,500 jobs, and create 2,500 new jobs, primarily in emerging markets. According to Marijn Dekker, Bayer AG Chairman, this attempt to efficient bundle resources and work toward streamlining structures is "the only way we can sustainably finance our investment in growth and innovation – for example, in new pharmaceutical products, in our BioScience business and in the expansion of our capacities in Asia."
For the remainder of this fiscal year, current guidance and structures will remain in place, for an expected adjusted sales growth in excess of 5 percent and gross earnings of more than EUR7 billion. The restructuring is expected to cost approximately EUR1 billion by the end of 2012, but after that the projected annual cost savings will be EUR800 million, about half of which is to be reinvested. Dekkers concluded, "The cutbacks involved will not be easy, but they are necessary. I am convinced that with more innovation and less administration, Bayer can become a better and faster company."
As Bayer's recently announced restructuring indicates, now is the time for pharmaceutical companies to consider a lean manufacturing implementation, which involves elimination of waste, responsiveness to customer demand, and continuous improvement of quality and processes. Lean manufacturing solutions hold out the promise of freeing up the needed resources to bolster competitiveness and profitability while at the same time obviating the need to drastically slash jobs and eliminate functions.
Smart Consulting Group has the experienced and qualified pharmaceutical consultants who can guide companies through the process of implementing lean manufacturing solutions. Their goal is to "provide the competitive edge you need to be the market leader in medical products."
