Grifols to lay off 8.5% of its global workforce under cost-cutting plan

SPAIN — Grifols, a Barcelona-based company that relies on blood plasma for its drug-making process, is set to lay off about 8% of its global workforce, mainly in its U.S. plasma operations as part of a new strategy aimed at generating annual savings of about US$427 million.

In a statement release, the firm revealed that 2,000 jobs will be cut at its plasma business in the United States, while 300 employees will be laid off in Spain and the US.

This is significant as the majority of Grifols’s plasma comes from the US, and the company’s bioscience division, which produces plasma-derived therapies, accounted for more than 77% of its 2021 revenue, with much of its U.S. footprint resulting from the acquisition of Talecris in 2011.

The company’s therapies begin with blood plasma, and fractionation is a crucial process in which the protein components of plasma are isolated and purified.

Grifols operates global plasma collection networks, which rely on people who voluntarily donate plasma. While donors in the U.S. aren’t paid, those in Germany, Austria, and Hungary receive flat-fee compensation.

The layoffs come as Grifols seeks to increase efficiency, lower costs, and centralize workflows through automation.

The company, which has around 27,000 employees in 30 countries, expects savings of 100 million euros (US$107 million) to be reflected in its 2023 balance sheet, with the remaining 300 million euros (US$321 million) added in 2024.

Grifols was hit hard by the pandemic, which resulted in blood collection halts in many countries, leading to plasma shortages that affected the firm’s results in 2020 and 2021.

Grifols and other plasma-based product manufacturers rely on global plasma collection networks, with the majority of U.S. plasma coming from people who voluntarily give their plasma.

Grifols has tried to diversify by acquiring Alkahest, which analyzes the proteome to discover and develop drugs for neurological disorders, and GigaGen, an antibody-drug developer, but its core business remains reliant on plasma.

The company paid €1 billion (US$1.1 billion) to buy the holding company that is the majority shareholder of Biotest, which brought Grifols 29 additional plasma collection centers.

The company has been grappling with the pandemic’s severe impact on its business, with blood collection halted in many countries, and has been looking to trim its debt by offloading about €2 billion (US$2.1 billion) worth of assets, including its Chinese business and its diagnoses unit.

According to executive chairperson Steven Mayer, Spanish pharmaceutical firm Grifols has undergone an extensive review of its organizational and cost structures, processes, facilities, systems, and incentive plans across its global operations.

As a result of the review, the company plans to implement a series of initiatives to improve financial performance, as well as become more responsive, decisive, and effective.

Pharmaceutical firms are reducing staff due to the difficult economic situation, with several companies announcing cuts in 2022.

Sanofi, Amgen, and Merck KGaA are among the companies undergoing restructuring efforts that include layoffs, with Sanofi potentially affecting 800 employees in India, Amgen laying off around 300 employees in the US, and Merck KGaA letting go of 133 jobs in Massachusetts.

These layoffs represent a significant decrease in staff for these companies, with Merck KGaA’s Billerica facility experiencing a 26% decrease in staff.

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