Astrezeneca to eliminate 7.300 jobs (February 3, 2012)
Published with kind permission of MEDNOUS.
Citing the need to make further productivity gains, AstraZeneca Plc has announced plans to eliminate 7,300 jobs by the end of 2014 or about 12% of its 60,000-strong workforce. Of this number, 2,200 positions will be taken from research and development. This is the third company-wide restructuring programme since 2007 which altogether will see the loss of 28,900 jobs and yield annual savings estimated at $5.9 billion by the end of 2014.
Speaking to journalists on 2 February 2012, David Brennan, the chief executive, said that the single biggest issue facing the pharmaceutical industry today is a decline in R&D productivity. To address this head on, the company will aggressively cut back internal R&D posts and make its neuroscience division ‘virtual.’ Mr Brennan made the remarks at a briefing following the publication of the company’s 2011 financial results.
These results showed revenue of $33.6 billion in 2011, down by 2% at constant exchange rates from a year-earlier, and a core operating profit of $13.2 billion, down by 4%. Core earnings per share increased by 7% to $7.28 per share, benefiting from a lower number of shares in issue and a decline in the company’s tax rate. AstraZeneca has executed a number of share repurchase schemes in recent years, reducing the number of its shares outstanding. Net share repurchases were $5.6 billion in 2011. In 2012, the target is $4.5 billion.
AstraZeneca is proposing a 5% increase in its second interim dividend which would bring the full-year payout to $2.80 per share, an increase of 10%.
While successive restructurings have reduced the company’s cost base, its revenue growth has also slowed due to the expiry of patents on major drugs and cutbacks in government healthcare budgets. In 2012, the company expects that revenue will decline by a low double-digit figure, when measured in constant currencies. Core earnings per share are expected to be in the range of $6.00 to $6.30.
AstraZeneca is tackling the productivity problem by increasing the proportion of its pipeline sourced externally, and by reducing in-house R&D capacity. Among the measures announced on Thursday is a plan to close a facility in Montreal, Canada and to reorganise the company’s neuroscience R&D operations. In-house staff, which number in the hundreds, will be reduced to around 40 or 50 scientists and these people will network with partners in academia and companies elsewhere. The new team will be based in Boston in the US and in Cambridge in the UK. Among the external partners will be the Karolinska Institute in Stockholm.
There aren’t any plans to transform other therapy areas into virtual laboratories, Martin Mackay, president of research and development, told journalists.
The AstraZeneca pipeline now includes 86 projects, of which 79 are in clinical development and a further seven have been either approved or launched. There are nine new molecular entity projects in late stage development, either in Phase 3 or in registration. During 2011, 25 projects successfully progressed to their next phase of development while 21 were withdrawn.
A 2011 success was the regulatory approval of Brilinta (ticagrelor), a new drug for acute coronary syndromes. On the other hand, AstraZeneca and Bristol-Myers Squibb were unable to gain US approval for a new diabetes drug, dapagliflozin. The Food and Drug Administration issued a complete response letter to the companies on 19 January. The two companies are working with the FDA to determine the next steps for the application.
Copyright 2012 Evernow Publishing Ltd
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