Rough pharma market takes toll on IMS

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As part of a restructuring plan, IMS Health, which sells prescription data to pharmaceutical firms, intends to lay off 10% of its workforce, or as many as 760 employees worldwide. The move echoes downsizing taking place at many of IMS's clients and could portend possible shakeups at other prescription data houses.

To be completed by year's end, IMS said the layoffs are designed to help survive a tough business climate. Last year many of the intelligence outfit's potential clients throughout pharma and biotech announced layoffs, including Pfizer, AstraZeneca, Johnson & Johnson, Bristol-Myers Squibb and Amgen. Meanwhile, IMS saw moderating revenue growth and pressure on operating margins. A source said the firm expects conditions for clients to remain challenging.

Last year proved difficult for other reasons. IMS rolled out a new standard for the way it measures dispensed prescriptions. After the roll out, it experienced certain “data issues,” which IMS said were independent of the new offering. But the issues may have caused disruptions among some its largest customers. The company maintained that it identified the issues, addressed them and issued guidance to clients.

IMS operates in more than 100 countries and has about 7,600 employees worldwide. It estimated it will record a total pre-tax charge of between $86-$90 million in the fourth quarter of 2007 to account for the terminations.

In an SEC filing, IMS said the changes would impact 1,050 employees. (The firm may add back some new positions in higher growth markets.) Those who do statistical and analytical work, as well as consultants, will be affected, as well as marketing, finance and administration. Once fully implemented, the actions are expected to generate roughly $55-$60 million in annual savings beginning in 2009.

IMS, which had 2006 revenue of $2 billion, is one of three main sellers of Rx data to the pharmaceutical industry. Others include the privately-held US company Verispan, which issued a “no comment” to the news by IMS. Dutch outfit Wolters Kluwer Health did not respond to a request for comment at press time.

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