Newspaper article The Record (Bergen County, NJ)

Medco Layoffs Likely

Newspaper article The Record (Bergen County, NJ)

Medco Layoffs Likely

Article excerpt

The $29.1 billion takeover of Franklin Lakes-based Medco Health Solutions Inc. by Express Scripts Inc. is likely to lead to job cuts among Medco's 2,000-plus employees in Bergen County, analysts said Monday.

"Express Scripts management will be running the combined company, and in my opinion, there will absolutely be layoffs at Medco," said Anthony Vendetti, an analyst who follows Express Scripts for Maxim Group in New York. "How many, I don't know. But there's not going to be two accounting departments, two human resources departments, two legal departments" in the combined company.

The acquisition of Medco was announced Monday, after the Federal Trade Commission ruled that combining the two pharmacy benefits giants would not violate antitrust laws. The combined benefits manager will handle nearly one of every three prescriptions written in the United States.

The takeover "represents the next chapter of our mission to lower costs, drive out waste in health care and improve patient health," said Express Scripts Chief Executive Officer George Paz in a statement. Paz visited the former Medco headquarters in Franklin Lakes to speak to workers Monday.

A spokesman for St. Louis-based Express Scripts said the merger's impact on the 4,000 Medco employees in New Jersey has not been determined. Medco is one of Bergen County's largest employers.

"We wouldn't speculate on any specific site or part of the organization," said the Express Scripts spokesman, Brian Henry. "We will conduct a thorough analysis of our workforce, taking into account the needs of each business and each marketplace, to ensure we are best positioned to serve clients' and patients' needs while achieving a competitive cost structure."

Express Scripts said the merger is expected to save $1 billion in one-time costs. A Wall Street analyst who spoke on background said that to achieve that number, Express Scripts would need to make "some major job cuts," and he predicted that many would be in New Jersey.

"Some people are going to have to find somewhere else to work," said Morningstar analyst Matthew Coffina in Chicago.

Jon Green, an analyst with New York-based Murphy & Durieu, predicted job cuts could take two or three years as Express Scripts decides which employees to keep.

"It is somewhat of a unique industry," Green said, adding the company doesn't want to lay off people whose skills are hard to replace.

Medco's North Jersey employees work at the Franklin Lakes headquarters and in rented space in Montvale, mostly in finance, technology, sales, marketing, account management and data analysis.

The company also has also a highly automated mail-order pharmacy that employs about 1,200 people in Willingboro.

Pharmacy benefits managers handle drug benefits for employer health plans and negotiate discounts with pharmaceutical companies and drugstore chains.

Employees outside company headquarters declined to comment on the merger Monday. One who did not give his name said that there was no news yet on potential job cuts, saying, "It's a wait-and-see game. …

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