A total of 258 employees of Salix Pharmaceuticals in North Raleigh are to be laid off following the company’s acquisition earlier this week by Canada-based Valeant Pharmaceuticals in a deal valued at more than $11 billion. The total represents nearly a third of the Salix work force, which numbered some 1,000 before the deal.
The new owner plans to maintain a “limited presence” in Raleigh.
In all, some 289 Salix workers are being let go, WRAL TechWire has learned.
Salix confirmed the layoffs in a mass layoff notice filed with the state of North Carolina.
Separately, in response to a series of questions submitted by WTW, Valeant responded with some additional information.
Employees being let go will receive “minimum severance of one year,” the company said.
Bonuses “where applicable” will be paid for 2015 on a pro-rated basis, Valeant added.
The remnants of the Salix operation will be overseen by Bill Bertrand, who has served as general counsel of Salix, a spokesperson for Valeant said.
“We firmly believe in being transparent about decisions that will impact employees in an effort to minimize uncertainty. We said that we expected headcount reductions at Salix when we announced the transaction and that there were no planned reductions to Salix’s Specialty Sales Forces or Hospital, Key Account and Field Reimbursement teams,” Valeant said.
“We are committed to treating impacted employees fairly, offering minimum severance of one year as well as prorated bonuses for 2015, if applicable.
“We intend to maintain a limited presence in Raleigh, and Bill Bertrand, Salix’s General Counsel, has agreed to stay on as Senior Vice President and General Manager.”
The deal closed Tuesday and layoffs began that day. Job cuts had been predicted by the companies when the sale was originally announced.
The layoff notice letter was mailed to the state that same day. The so-called WARN letter is required by law under the Worker Adjustment and Retraining Notification Act.
According to the notice, the layoffs are to end by Oct. 30.
The company said in the notice that the job cuts were being made due to “synergies” of resources and responsibilities between the two companies.
At least 10 senior executives (senior vice presidents and vice presidents) are among those being let go. However, most positions are so-called “back office” workers, such as human resources, accounting, finance and information technology, according to the notice.
As part of the acquisition, several Salix executives and former executives will receive millions of dollars in “golden parachute” agreements.
The company launched in California in 1989 and later moved to Raleigh.
Salix shares stopped trading as of April 1. The deal with Valeant was announced in February.
Salix, which focuses on gastrointestinal drugs, is to operate as a subsidiary of Valeant.
Salix specializes in medicines for gastrointestinal disorders, including Pepcid and Zegerid for ulcers and gastroesophageal reflux, and Relistor for constipation caused by opioid drugs. It’s developing two more drugs for opioid-induced constipation, one for rheumatoid arthritis and a drug called rifaximin for Crohn’s disease and preventing complications of liver cirrhosis. Rifaximin is currently under review for a third use, treating irritable bowel syndrome. Last year, Salix reported total revenue of $1.13 billion and a net loss of $415 million.
Valeant specializes in dermatology, eye health and neurology. It focuses on frequent acquisitions rather than internal drug development. Last year it had revenue of $8.3 billion and net income of $912 million.
Landing Salix would be a redemption for Valeant, which was snubbed in its pursuit of Botox-maker Allergan last year. Valeant is looking to grow and in 2013, it acquired the contact lens-maker Bausch + Lomb for $8.7 billion.