AstraZeneca plans fundamental business changes, while Pfizer cuts jobs at UK plants
AstraZeneca has announced plans to outsource all ts drug manufacturing activities within ten years.
AstraZeneca has announced plans to outsource all ts drug manufacturing activities within ten years.
David Smith, AstraZeneca's executive vice president of operations, said that the company aimed to become a pure r&d and marketing organisation.
"Manufacturing for AstraZeneca is not a core activity," Smith said: "There are lots of people and organisations that can manufacture better than we can."
Smith, who is leading a restructuring drive designed to cut costs and improve profitability before the expiry of patents on key drugs, said that the priority would be to outsource all of AstraZeneca's manufacturing of APIs.
He said that it would be possible to find cheaper contract manufacturers, a number of which would be in the Far East. Smith added that the changes would take several years to complete because of regulatory hurdles.
Since February 2007, the company has said that it plans to remove a total of 7,600 jobs - or 11% of its 66,000-strong global workforce.
As for AstraZeneca's ultimate aim, Smith said: "We would own the IP, the research, branding and the quality and safety issues ... but [everything else] would be outsourced. The idea is to take out as many stages as you can."
The company is set to lose 38% of its revenue over the next five years because of the expiry of patents on Arimidex, a breast cancer drug with annual sales of whose patent ends in 2010; Seroquel, a schizophrenia drug with a patent expiry in 2011; and Symbicort, an asthma medicine and a 2012 patent expiry.
The majority of cuts announced so far are in the group's manufacturing and supply-chain operations. The firm's research unit is expected to emerge relatively unscathed.
Smith said that the pharmaceutical sector had been among the most conservative global industries in its attitude towards manufacturing and the supply chain, and predicted that we are going to go through a model of outsourcing the back-end . . . we don't see manufacturing as core,. he said.
In related news, Pfizer, has announced that it is shedding 420 jobs at its UK factory in Sandwich, Kent, and that it will opt to outsource some functions.