AstraZeneca to Cut 1,600 Jobs, Have $1.4 Billion CostsAlbertina Torsoli and Phil Serafino
AstraZeneca Plc will cut about 1,600 jobs as it overhauls research and development, leading to $1.4 billion in costs as new Chief Executive Officer Pascal Soriot tries to revive the U.K.’s second-biggest drugmaker.
AstraZeneca will focus research in Cambridge, England; Gaithersburg, Maryland; and Moelndal, Sweden, the company said in a statement today. Astra also will move its corporate headquarters from London to Cambridge, where it plans to spend $500 million on a new facility.
The jobs to be eliminated equal roughly 3.1 percent of AstraZeneca’s workforce of about 51,700 at the end of December. The plan will help improve research productivity at AstraZeneca, said Soriot, who was named CEO last year, replacing David Brennan, after a series of drug-development setbacks.
The announcement means “a strong commitment to the U.K.” and “that we believe the science is strong in Cambridge,” Soriot said in a telephone interview today. “We wanted to come closer to outstanding science.”
Soriot said another priority of the reorganization is to “bring closer to one another” researchers working on drugs made from human cells, known as biologicals, with those working on medicines based on chemical compounds.
The overhaul shows the influence of MedImmune Inc., the American biotechnology company acquired by AstraZeneca in 2007, according to Eric Le Berrigaud, an analyst at Bryan Garnier & Co. in Paris. MedImmune, based in Gaithersburg, had a research site in Cambridge.
“MedImmune is becoming central in AstraZeneca’s R&D organization,” he said by phone. “The initial impressions -- that MedImmune people are gaining power within the company, that Astra wants to grow bigger in biologics --seem to be confirmed.” He recommends buying AstraZeneca shares.
The stock fell 0.7 percent to close at 3,049.50 pence in London today.
AstraZeneca will discuss the plan with employees in coming days before it briefs investors and analysts on strategy in New York on March 21, Soriot said in the interview. The restructuring, which will be completed by 2016, will lead to $1.4 billion in one-time charges, of which $800 million will be cash expenses, AstraZeneca said.
The company predicted cost savings of about $190 million a year by 2016 from the measures.
AstraZeneca forecast in January that sales will fall by a “mid- to high-single digit” percentage this year on increasing competition from lower-priced generic medicines. Profit will decline “significantly” more than revenue, the company said. AstraZeneca in October suspended its share buyback program so it would have more funds to invest in the business.
Drugs that account for more than 40 percent of AstraZeneca’s sales lose patent protection by the end of next year, and the company suffered setbacks in developing new products in recent years.
AstraZeneca’s U.K. research will be consolidated in Cambridge, a “world-renowned center for life sciences,” the company said. About 1,600 jobs will be moved from Alderley Park in Cheshire, with the bulk of those going to Cambridge, the company said. It will keep at least 700 non-research jobs at Alderley Park.
Gaithersburg will be home to much of the company’s U.S.- based drug development, as well as jobs in global marketing and sales of U.S. specialty-care drugs. About 1,200 jobs will be moved from Wilmington, Delaware, which will remain North American commercial headquarters, with about 2,000 people.
Moelndal, near Gothenburg in Sweden, will continue to be a global research center focusing on chemical compounds, the company said. Of the total 1,600 job cuts, about 650 will be in the U.S.
The reorganization shouldn’t be interpreted as a step leading to a big acquisition, Soriot said.
“We are still open to the idea of a larger deal” if the company were to find something “that makes sense, but it’s a low probability,” the 53-year-old CEO said during the interview. “We can return to growth with what we have in our hands.”
AstraZeneca will complement the existing assets with “a series of business development deals and small, bolt-on acquisitions,” Soriot added. “From now on I will be spending an enormous amount of time working on this, because it is one of our priorities,” Soriot said, referring to partnerships and acquisitions.