AstraZeneca to axe a further 7,300 jobs
Plans to save US$1.6bn annually by 2014
AstraZeneca is to cut a further 7,300 jobs over the next two years as part of a restructuring initiative to save US$1.6bn a year.
The redundancies come on top of a programme of 9,000 job losses announced in 2010.
The Anglo-Swedish pharmaceutical giant also announced a fall in pre-tax profit for the three months to the end of December 2011 to $2.05bn compared with $2.28bn in 2010. Revenue in Q4 was unchanged at $8.6m on constant exchange rates.
Full-year revenues were down 2% at constant exchange rates to $33.3bn after the firm lost nearly $2bn in sales to generic competition and $1bn because of government prices.
Despite the challenges, AstraZeneca is committed to returning cash to shareholders and plans to buy back $4.5bn in shares in 2012.
David Brennan, chief executive, said: ‘Disciplined execution of our strategy has delivered a good performance in 2011 in the face of intensified pricing pressure and generic competition.
‘While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, r&d based strategy, and today we have announced further steps to drive productivity in all areas to improve returns on our investment in innovation.’
He added that the job cuts should be seen in the context of AstraZeneca taking ‘decisive steps to improve returns on investment’.
‘We continue to reshape our business to improve productivity and innovation and with it our long-term ability to compete in a rapidly changing healthcare environment,’ he said.
The firm will continue to drive efficiencies in its Selling, General and Administrative (SG&A) functions by rationalising non-customer facing support groups and introducing new ways of meeting customer needs.
The number of sales and marketing regions has already been reduced from five to three and smaller countries are being clustered to ‘optimise resources, increase shared services and reduce the cost base’.
In parallel, AstraZeneca is accelerating its use of new customer channels, including digital technology and the use of call centres for sales and medical advice.
The company currently estimates that approximately 3,750 will go in SG&A as a result of this reorganisation.
A focus for much of the change in r&d is the neuroscience therapy area and AstraZeneca believes that it will have the best chance of success in future by combining the company’s internal expertise with innovative external science.
As a result, the firm will create a new ‘virtual’ neuroscience Innovative Medicines unit (iMed) made up of a small team of around 40–50 AstraZeneca scientists conducting discovery and development externally, through a network of some of the most innovative partners in academia and industry globally. The team will be based in major neuroscience hubs – Boston (US) and Cambridge (UK) – and work closely with innovative partners such as the Karolinska Institute in Stockholm (Sweden).
Martin Mackay, president of research and development at AstraZeneca, said: ‘The creation of a virtual neuroscience iMed will make us more agile scientifically and financially – we will be able to collaborate flexibly with the best scientific expertise, wherever it exists in the world.’
The implementation of this new model will lead to the loss of 2,200 jobs globally and the end of r&d activity at two sites that are focused on neuroscience: Södertälje in Sweden and Montreal in Canada. Södertälje will remain an important part of the AstraZeneca network and the Montreal facility will close.
As AstraZeneca makes further efficiencies in the supply chain, a further 1,350 jobs will go in support functions in Operations.
Going forward, AstraZeneca said revenue in 2012 would continue to be affected by the anticipated loss of exclusivity for antipsychotic drug Seroquel IR and hypertension drug Atacand globally, and for cholesterol drug Crestor in Canada. The firm therefore anticipates a constant currency revenue decline for 2012 in the low double-digit range.
