Pierre Fabre Laboratories present their new strategic plan, "Trajectoire 2018"
December 12, 2014
"Trajectoire 2018" confirms the group's positioning on its continuum "from health to beauty" and its territorial anchoring in the Midi-Pyrenees. The project aims to restore the economic balance of the two branches of activities and accelerate the international development of the dermo-cosmetics branch. It includes an important project to re-engineer the R&D and commercial activities in France of the pharmaceuticals branch.
The Pierre Fabre company has announced its new strategic plan entitled "Trajectoire 2018" focused on innovation, international development and sustainable value creation. "Trajectoire 2018" has been communicated on December 9th and 10th to the works council of Pierre Fabre SA, Pierre Fabre Pharmaceuticals and Pierre Fabre Dermo-Cosmetics. The key components of the plan were reviewed and defined by the Group's various control bodies, including Pierre Fabre Participations acting in the name of the Pierre Fabre Foundation, which is the Group's majority shareholder and a recognized public-interest foundation, to ensure the Group's independence and medium-term development in line with its identity.
Confirming forcefully the strategic positioning on a "from Health to Beauty" continuum of activities which has always set Pierre Fabre apart, Trajectoire 2018 acknowledges the contrasting results of its two divisions. While the Dermo-Cosmetics division, which represents 55% of sales, has seen sustained growth, providing most of the Group's profits, the Pharmaceuticals division has become very fragile due to the double effect of low R&D productivity and a major loss of revenues in France following the huge regulatory pressure put on the Pharmaceuticals industry (delisting of mature drugs, price drops, rapid rise of generics, etc.)
Trajectoire 2018 aims primarily to restore the competitiveness of the Pharmaceutical division in order to financially rebalance the Group's activities through a shared and socially responsible vision. To that end, the plan aims to provide the Pharmaceuticals division with renewed strategic, operational and financial maneuverability, and to build a Consumer Healthcare franchise which will be able to take full advantage of the dynamic OTC, oral care and natural health markets. In parallel, Trajectoire 2018 aims to speed up the international growth of the Dermo-Cosmetics division through a development strategy focused on its current brand portfolio, particularly in Asia where the Eau Thermale Avène brand is already very successful, and in the US with the launch of Hemangeol, an innovative treatment in the field of pediatric dermatology. Through the expected restoration of economic balance between the two divisions and the accelerated international growth, Trajectoire 2018 aims to put the Pierre Fabre Group in a financial position to acquire new products, with the priority of strengthening our pharmaceuticals activities.
To support these strategic orientations, Trajectoire 2018 includes a project to reengineer 1) the R&D activities in Prescription drugs and in Consumer Healthcare and 2) the medical detailing and commercial activities of the Pharmaceuticals division in France. Both reengineering will require a rightsizing plan for workforces. The corresponding project was proposed to the Pierre Fabre Pharmaceuticals central works council, and to the various works councils concerned.
The R&D reengineering in Prescription drugs implies refocusing resources and efforts on better targeted therapeutic areas offering complementary return-on-investment profiles : oncology (with a priority focus on biotechnological platforms), neuropsychiatry and dermatology. This refocusing will be led by a new organization structured around three innovation units (oncology, neuropsychiatry and dermatology) supported by three platforms of expertise (new biotechnological entities, new chemical entities and clinical development). This leaner organization will focus on the creation of medico-economic added value, on efficient project management and operational effectiveness. A 4th innovation unit will be devoted to Consumer Healthcare R&D, which requires a very rapid pace of new product development.
The implementation of this new pharmaceuticals innovation model would result in a reduction of the R&D workforce that would however continue to be concentrated in the Midi-Pyrénées region (Toulouse, Castres, Gaillac) and in Saint-Julien-en-Genevois. The number of positions would fall from 925 to 658 by 2016, resulting in a workforce reduction of -272 people (including 255 in France) when taking into account vacancies and job creations.
The redeployment project for the commercial organization in France will encompass continuation of medical detailing to GPs, specialists and pharmacists, in order to keep supporting the existing products and accommodate potential new products if acquisition or partnership projects are materialized. However, given the weight of its medical detailing organization, the Pharmaceuticals division can no longer absorb the impact on its gross margin that regulatory measures have caused following the €100-million drop in sales in France since 2009. The objective is therefore to adapt the size of the medical detailing organization to the actual needs of the product portfolio, while redirecting part of this current investment towards the pharmacist and the patient.
This project would involve reducing the number of positions in the detailing organization (and associated support functions) from 928 to 547 by 2016, resulting in a workforce reduction of -279 people, taking into account vacancies and job creation.
These transformations will be implemented in the respect for the humanist values of the Group and with the adamant willingness to maintain its strong regional presence in Midi-Pyrénées. A primary objective will be to limit the number of job cuts to a minimum, by providing access to measures encouraging internal and external mobility, as well as professional retraining. A second objective will seek to compensate for the R&D jobs lost by offering transfers to growing activities in the Group, as a priority in Midi-Pyrénées. To this respect, a significant and continuing effort will be made to support professional retraining. A third objective will be to preserve the Group's overall workforce level in the Tarn area where the company was born. A mission will also be set up to economically revitalize territories, targeting the Tarn, Haute-Garonne and Corrèze areas.
Commenting about the reorganization project, Bertrand Parmentier, CEO of the Pierre Fabre Laboratories declared :"I am fully aware of the significance of the period that our ' Pierre Fabre House' is preparing to face. In these times, which are difficult and demanding for all employees, we will strive to assist each employee impacted, so that they can successfully embark on a new professional project." He added that "Pierre Fabre will continue all of its research and production activities in France, particularly in the South-west and especially in the Tarn, which has always been and will remain our anchor territory."
Concerning the plan as a whole, Bertrand Parmentier emphasized that "Trajectoire 2018 is a corporate project that forms a renewed vision of the ‘From Health to Beauty’ continuum of activities that makes us stand out from the rest of the healthcare industry. Focused on innovation, international development and the creation of sustainable value, it is a project which aims to reinvent the company in a spirit of solidarity, in line with its values, and to allow its on-going development from its home territory."