And so, the drugmaker is, indeed, eliminating thousands more jobs, as reports indicated earlier this week. Where will they be coming from? Well, 3,750 jobs are being slashed from sales and marketing and assorted administrative operations. Another 2,200 positions are being eliminated from R&D and the remaining 1,300 will come from operations, as more supply chain outsourcing takes place.
The cuts, which are designed to save $1.6 billion annually, by the end of 2014, underscore the fallout expected from patent expirations on some of its biggest sellers, notably the Crestor cholesterol pill, the Nexium acid reflux med and the Seroquel antipsychotic. The drugmaker warned that profits will fall as much as 18 percent this year, but will buyback $4.5 billion in stock to appease investors (see here). The layoffs are in addition to 21,600 positions already eliminated since 2007.
The layoffs continue the recent acceleration of job cuts in the pharmaceutical industry. Recently, Takeda Pharmaceuticals announced plans to eliminate 2,800 jobs (see here), Teva Pharmaceuticals is shedding 1,500 positions (read this), Sanofi axing hundreds of workers (read here) and Novartis is slashing 2,000 jobs in the US (see this). This morning, Challenger Gray & Christmas noted that 4,071 pharma jobs were eliminated last month in the US, the third-highest industry tally, behind retailing and the financial sector (look here).
In recent weeks, AstraZeneca had already disclosed plans to eliminate 400 jobs in its commercial business and US headquarters, and another 1,150 jobs from the US sales force, as more use of 'digital technology' and call centers are made to reach physicians. Overall, the number of sales and marketing regions has been reduced from five to three, and smaller countries are being clustered as they share more services in order to lower costs.
In R&D, neuroscience is taking a big hit. The drugmaker is forming what it calls a 'virtual' neuroscience Innovative Medicines unit that will include a small team of around 40 to 50 scientists who will work on discovery and development externally with partners in industry and academia, such as the Karolinska Institute in Stockholm. They will be based in Boston and Cambridge in the UK.
As a result, an R&D site in Montreal, where 132 people work and that focuses on neuroscience, will be closed. And another in Södertälje in Sweden will also lose neuroscience jobs, although this facility is also the largest AstraZeneca manufacturing site and a base for commercial business covering the Scandinavian markets, so this remains open (see this).
The latest cuts amount to a third phase. Two years ago, AstraZeneca indicated plans to reduce its overall headcount by 10,400 jobs. Between 2007 and 2009, the drugmaker eliminated 12,600 positions, a move that saved $1.6 billion annually, although that figure rose to $2.4 billion by 2010. The cuts announced that year were designed to save $1.9 billion annually by 2014.
axe pic thx to brittgow on flickr