Cangene cuts workforce by 20%

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This article was published 06/01/2012 (5263 days ago), so information in it may no longer be current.

Declining sales to the United States have prompted Cangene Corp. to cut its workforce by nearly 20 per cent.

The Winnipeg-based biotechnology company, one of Canada’s oldest and largest biotech firms, announced late Thursday that 120 of its 700 jobs would be eliminated within the next month.

“Because the majority of our workforce is in Winnipeg, the majority of the reduction will be in Winnipeg,” said Mike Graham, Cangene’s chief financial officer.

Executives weren’t immune to the cuts, as Cangene announced William Bees, senior vice-president of operations, and Grant McClarty, vice-president, research and development, are leaving the firm.

Cangene employs about 520 people in Winnipeg.

It has manufacturing facilities here and in Baltimore, Md.

Graham said sales of bio-defence products to the U.S. government, one of Cangene’s biggest customers for nearly a decade, have fallen off.

Cangene first won the contract to supply vaccinia immune globulin to the U.S. Strategic National Stockpile in 2002. It didn’t lose out in the bidding on such contracts until the summer of 2010.

“The market is tough. The U.S. economy has not been in the best of shape. The U.S. Defence Department was stockpiling bioterrorism products (for years) and we created the initial stockpile of those products,” Graham said.

“Some of this stuff tends to run in cycles. If (the U.S. government) does buy them again, it will be on a more gradual replacement cycle,” he said.

“Prior to 9/11, they didn’t have any stockpile.”

The financial impact of the job reductions in Cangene’s current fiscal year is expected to be neutral, with the cost savings offset by severance costs. However, the changes are expected to help Cangene to save between $6 million and $7 million annually.

John Sedor, the company’s president and CEO, said aligning its workforce with its focus on commercial products is a top priority for the company.

“Unfortunately, these changes affect talented people who have made important contributions to our organization. It’s never easy to make this type of decision, but it was necessary to better position the company for continued success,” he said in a news release.

Last month, Cangene reported a $4.4-million loss for the first quarter of its 2012 fiscal year, down from a $3.5-million loss for the same period 12 months ago. Cangene will offer outplacement services to its laid-off employees, Graham said.

geoff.kirbyson@freepress.mb.ca