NEWS23 July 2009

IMS Health to axe 850 jobs across the globe

Financials North America

US— Healthcare information provider IMS Health is to cut 850 jobs globally over the next 12-15 months, with 170 set to go in the US, according to CEO David Carlucci.

The number of positions at risk represents just over 10% of the company’s 7,500 worldwide employees. The action comes in response to a second-quarter decline in revenue that was worse than expected.

Carlucci said: “While we planned for lower growth coming into 2009, the accelerating healthcare market dynamics compounded by an economic downturn have caused our customers to significantly rein in their spending.”

He told investors of a number of engagements where “we have had agreements to move forward, only to then be shut down” by people at higher levels within the client organisation.

Carlucci said: “We are taking decisive actions to lower our cost structure and better position the business for a return to growth.”

IMS plans to generate annual savings of up to $85m by 2011 through the restructuring, which involves “all areas of the business and regions”, Carlucci said.

The majority of actions will take place in Europe, the Middle East and Africa (EMEA), including a “right-sizing” of the regional headquarters function in London and a reduction and consolidation of operating units.

More generally, the company said it will “leverage foundational investments in process improvements” to reduce costs and improve productivity in its sales, finance, HR, customer delivery and customer development organisations.

Sales and management consulting teams will be reduced in areas of lower demand, but IMS said it would continue to build and invest in “high-value, strategic growth areas” – including speciality and patient-centred insights, in serving payers and governments, and in emerging pharma markets where growth is in the double digits.

Overall, second-quarter revenue was down 13% (or 7% on a constant dollar basis) to $522.8m, while net income was down 19% to $63.7m. First-half revenue fared little better, down 11% ( 6% constant dollar) to $1.05bn, but net income was up 42% to $198.2m.

IMS last restructured in 2008, axeing 10% of its workforce to save $60m annually.