AstraZeneca announces jobs cuts and R&D restructuring - Pharmaceutical Technology

Latest Issue

Latest Issue
PharmTech Europe

AstraZeneca announces jobs cuts and R&D restructuring

Pharmaceutical Technology Europe

AstraZeneca plans to undertake further restructuring in its R&D operations, resulting in the elimination of 3500 jobs. The move is part of a larger effort by the company to refocus its R&D activities to include a reduction in the number of disease targets within its core therapeutic areas, a continued focus on externalization and a smaller R&D site footprint.

The company hopes to realize annual savings of $1 billion by 2014, with half of that amount realized through cost savings and the other half through cost avoidance. The company preliminarily estimated that 3500 positions will be eliminated, but after taking into account the relocation of some positions and the investment of other skills and capabilities in biologics, the net reduction of jobs would be approximately 1800.

The company estimates restructuring costs to be $1 billion, of which approximately 60% will be in cash costs. The recent jobs reduction announcement follows further restructuring in the company from 2007 to 2009, which involved the reduction of 12600 positions and restructuring costs of $2.5 billion. The company realized annualized cost benefits of $1.6 billion by the end of 2009 from that restructuring plan and expects the annual savings from that restructuring to increase to approximately $2.4 billion by 2010.

In the next phase of restructuring, which includes the completion of the previous restructuring programs, additional initiatives in supply chain and sales, general, and administrative functions and the newly announced R&D restructuring, the company hopes to realize an additional $1.9 billion in estimated annual cost-savings by the end of 2014, with half realized by the 2011. When fully implemented, these programs will impact 10400 positions. Additional restructuring charges of $2.0 billion are anticipated between 2010 and 2103, with approximately 60% to be taken in 2010 and most of the remainder in 2011.

AstraZeneca reported 2009 revenues of $32.8 billion, up from 2008 revenues of $31.6 billion. Operating profit increased from $9.1 billion in 2008 to $11.5 billion in 2009. The company expects that revenues in 2010 will be affected by the expected loss of market exclusivity for Arimidex (anastrozole) and Pulmicort Respules (budesonide) in the US. Compared to a 2009 revenue baseline that included unanticipated contributions from US sales of Toprol-XL (metoprolol) and H1N1 pandemic influenza vaccine, the company expects as much as a “mid single-digit decline” in revenue in 2010 on a constant currency basis.

Cuts may be on the way for GSK
Meanwhile, analysts report that GlaxoSmithKline (GSK) is expected to announce restructuring when it releases its financial results later this week. The UK newspaper Financial Times reported on 31 January that the company is expected to announce job cuts of 3000. As of press time, GSK is expected to announce its financial results on 4 February.


blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
| Weekly

What role should the US government play in the current Ebola outbreak?
Finance development of drugs to treat/prevent disease.
Oversee medical treatment of patients in the US.
Provide treatment for patients globally.
All of the above.
No government involvement in patient treatment or drug development.
Finance development of drugs to treat/prevent disease.
Oversee medical treatment of patients in the US.
Provide treatment for patients globally.
All of the above.
No government involvement in patient treatment or drug development.
Jim Miller Outsourcing Outlook Jim MillerOutside Looking In
Cynthia Challener, PhD Ingredients Insider Cynthia ChallenerAdvances in Large-Scale Heterocyclic Synthesis
Jill Wechsler Regulatory Watch Jill Wechsler New Era for Generic Drugs
Sean Milmo European Regulatory WatchSean MilmoTackling Drug Shortages
New Congress to Tackle Health Reform, Biomedical Innovation, Tax Policy
Combination Products Challenge Biopharma Manufacturers
Seven Steps to Solving Tabletting and Tooling ProblemsStep 1: Clean
Legislators Urge Added Incentives for Ebola Drug Development
FDA Reorganization to Promote Drug Quality
Source: Pharmaceutical Technology Europe,
Click here