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Sanofi-Aventis, which has about 1,700 employees across Canada, including at vaccine maker Sanofi-Pasteur, did not specify where the job cuts will take place. (Sanofi-Pasteur/Sanofi-Pasteur)
Sanofi-Aventis, which has about 1,700 employees across Canada, including at vaccine maker Sanofi-Pasteur, did not specify where the job cuts will take place. (Sanofi-Pasteur/Sanofi-Pasteur)

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R&D in Quebec pharma industry continues to erode Add to ...

These are stories Report on Business is following Thursday, Feb. 2, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Another kick to life sciences Quebec's life sciences industry took yet another kick today as AstraZeneca PLC announced a sweeping overhaul of its global R&D operations that includes the shutdown of its Montreal research centre.

Some 135 jobs will be lost in Montreal, among 7,300 worldwide by 2014, the pharmaceutical company announced.

Across Canada, the operation based in the Toronto area employs about 800 people, but today's announcement is yet another blow.

Last month alone, Johnson & Johnson announced the layoff of 126 employees at its R&D centre in Montreal's east end, and Sanofi targeted 100 jobs, also in Montreal.

In 2010, Merck & Co. closed its Montreal R&D operation.

As The Globe and Mail's Sean Silcoff and Bertrand Marotte have reported, cuts have taken a toll on the global industry. Not only have economic jitters played a role, but expiring patents and the slowdown in new big drugs have also forced the industry to regroup.

Employment in the pharmaceutical and medical manufacturing sector has fallen sharply in Quebec, despite huge support from the federal and Quebec governments.

Glencore, Xstrata in talks A major deal is taking shape in the mining industry today, with the potential to reshape the sector, The Globe and Mail's Eric Reguly reports.

Xstrata PLC, the parent of Canada's Falconbridge, said its own minority owner, Glencore International PLC, approached the company and is now in talks aimed at an all-stock merger.

The combination of Glencore and Xstrata would create an $88-billion (U.S.) goliath in mining and commodities trading.

Glencore, which went public last year, has eyed Xstrata for some time, but the latter's CEO, Mick Davis, hadn't bitten before now.

Open Text soars Shares of Open Text Corp. surged today after the software company's earnings yesterday, which beat analysts' expectations.

The Waterloo, Ont.-based company posted an jump in second-quarter profit to $47.4-million (U.S.) or 81 cents a share, from $37.1-million or 64 cents a year earlier. Revenue climbed to $321.4-million from $267.5-million.

Indeed, CIBC World Markets analyst Stephanie Price said she believes is undervalued, adding that "we believe Open Text will continue to make accretive acquisitions to gain market share."

Bernanke warns on economy, debt The U.S. economy is gradually recovering but the pace has been "frustratingly slow," Federal Reserve Chairman Ben Bernanke said today as he also warned policy makers to take care.

"Over the past two and a half years, the U.S. economy has been gradually recovering from the recent deep recession," the central bank chief told a U.S. budget committee in Washington today.

"While conditions have certainly improved over this period, the pace of the recovery has been frustratingly slow, particularly from the perspective of the millions of workers who remain unemployed or underemployed. Moreover, the sluggish expansion has left the economy vulnerable to shocks."

Mr. Bernanke also noted that economic growth is slowing the world over, partly because of the ripple effects from Europe's debt crisis.

While Europe's leaders are working hard to ease their mounting troubles, "risks remain that developments in Europe or elsewhere may unfold unfavourably and could worsen economic prospects here at home," he warned.

Mr. Bernanke also issued a warning over the ballooning U.S. budget deficit, which has averaged about 9 per cent of GDP in the past three years.

While it should shrink as the economy improves, "the nation will still face a sizable structural budget gap if current budget policies continues."

Thus, he said, fiscal policy has to be on a "sustainable path," but policy makers have to also "take care not to unecessarily impede the current economic recovery."

PetroChina in shale deal China is moving ever deeper into Canada's energy industry with a deal by PetroChina Co. today to join Royal Dutch Shell PLC in a shale gas project in northeastern British Columbia.

The company did not disclose the pricetag for the 20-per-cent stake in Shell's Groundbirch project, but The Financial Times indicated the deal is worth about $1-billion.

Though a deal with Encana Corp. fell apart in mid-2011, Chinese companies have been investing heavily in the energy industry, including a $21.-billion deal by CNOOC Ltd. for OPTI Canada Ltd. late last year.

Facebook issues The Globe and Mail's Omar El Akkad takes a look today at five issues that face Facebook when it goes public.

Even though investors have been clamouring to get a piece of Facebook for years, the company's regulatory filing reveals a number of previously undisclosed details about its inner workings – and not all of them good.

No deal yet Greek officials say they're closing in on a crucial deal with private creditors that could see the bondholders take a hit of something in the area of 70 per cent. But they've been saying that for some time, and time's running short to stave off a default.

Looming is a late March €14.4-billion bond redemption, while talks with the private creditors will determine whether Athens receives €130-billion more in bailout funds from its international rescuers.

"It has no cash to make that March payment, so it faces bankruptcy and a complete public sector shutdown if it defaults on its payments the hard way ... the old-fashioned way," Mr. Weinberg warned.

In a recent report, Mr. Weinberg looked at the parties involved, and found that it's easy to see why the two sides remain apart:

Greece: "It is likely the only player to have fully accepted the reality that the debt as written cannot be serviced and will never be repaid. Its objective in these talks is to achieve the maximum reduction possible in the overall size of the debt, to restructure what remains to the longest repayment period possible and to do all of this by March 20."

Bank creditors: "The general banking system and insurance companies simply want to minimize losses on their balance sheets ... However, keep in mind that whatever can be extracted from the other stakeholders in the negotiations means a lesser loss for the banks."

Hedge funds: "They are presumed to have acquired a blocking stake, for less than €3-billion ... This empowers them to force a default - via cross-default clauses - on the entire €240-billion at face value of the bonds outstanding. They are likely holding out for at least a better deal than the other stakeholders, if not full payment."

Euro zone governments that are watching: "Their idea is to minimize their share of the cost of the yet-to-be-defined new Greek bailout ... Note that whatever the EMU governments put into the pot reduces the amount that has to be contributed by private sector writedowns. Thus, the banks and insurance companies have every reason in the world to play chicken with the governments as the March 20 doomsday approaches."

The European Central Bank: "The ECB has every reason to want these negotiations to work, but it is standing aside from the talks because the conequences it faces are mixed depending on the outcome."

Josef Ackermann, the chief executive officer of Deutsche Bank AG, said today that an agreement would make a huge difference in the long-running euro debt debt crisis, by bringing down the threat of contagion.

"Where we stand now is a net present value loss of 70 per cent, that’s a really attractive offer for Greece but then a default would cost a lot more," he told reporters in Frankfurt, according to Bloomberg News.

The Wall Street Journal said there's a rift between Germany and the International Monetary Fund over the debt restructuring.

"The fact that Spain and France’s bond auctions today were decent has been largely ignored," said senior economist Jennifer Lee of BMO Nesbitt Burns.

"The problem is the lack of closure … the closure on the Greek talks with the private sector," Ms. Lee added. "According to a Greek spokesperson, there were 'three or four sticking points left' to hammer out, but that 'the bulk of the negotiations has been concluded.' So in other words, they’re not done and the talks continue. Although the EU’s Olli Rehn is promising a conclusion in 'coming days,' well, we’ve been told that before."

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