AstraZeneca announces further job cuts

Three days after announcing that it is cutting 1,600 jobs from its R&D operations, AstraZeneca has outlined a strategy involving a reduction of 2,300 sales and administration posts worldwide. Together with the balance of the restructuring programme announced in February 2012, involving 1,150 jobs, this brings the total global headcount reduction for the period 2013-2016 to an estimated 5,050.

‘Transforming how we work is crucial to delivering our strategy,’ said CEO Pascal Soriot. ‘We are committed to dramatically simplifying our organisation and our processes, while creating an innovative environment. Co-location on a more focused footprint will support that aim, as will increasing autonomy to accelerate and improve decision-making.’

The combined programme of changes is expected to incur a one-time restructuring cost of US$2.3bn but will result in benefits of approximately $800m per annum by 2016.

We are committed to dramatically simplifying our organisation and our processes, while creating an innovative environment

The overall strategy is aimed at returning the company to growth and achieving scientific leadership. ‘Our vision is clear – to be a global biopharmaceutical company with a focused portfolio in core therapy areas, underpinned by distinctive science and a growing late-stage pipeline,’ Soriot stated.

‘AstraZeneca is committed to executing a focused, innovation-driven, global biopharmaceuticals strategy, exploiting our unique combination of strengths in large and small molecules, immunotherapies and protein engineering technologies.’

The focus will be on three core therapy areas: respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology. The company will continue to be active in infection and vaccines and in neuroscience, although its investments ‘will be more opportunity-driven’.

Soriot summarised AstraZeneca’s strategic priorities as driving the company’s on-market growth platforms to return to growth as it moves through a period of patent expiries and revenue declines; progressing the Phase II pipeline; launching a steady flow of speciality care products; rebuilding the R&D engine through innovation and distinctive science supported by co-location of our teams and better access to globally recognised science clusters; dramatically simplifying the business, improving productivity and building a culture that supports long-term success; and leveraging business development and acquisitions to strengthen the pipeline further.

To help achieve sustainable scientific leadership and improve pipeline productivity, AstraZeneca is reshaping its footprint and evolving its operating model

‘By accelerating development of several new molecular entities we believe our Phase III pipeline has the potential to double in size by 2016,’ he said. Combined with ongoing efforts to progress a strong Phase II biologics pipeline into late stage development, he believes this will create a portfolio more weighted towards speciality care, balancing AZ’s traditional strengths in primary care. The company is also increasing its investment in life cycle management to support key on-market and late stage pipeline products such as Brilinta, FORXIGA, BYDUREON and lesinurad.

To help achieve sustainable scientific leadership and improve pipeline productivity, AstraZeneca is reshaping its footprint and evolving its operating model, Soriot said. As well as reducing the R&D workforce, the company will increase its proximity to bioscience clusters, making it easier for researchers to collaborate with external partners and with each other. ‘Additionally, we will increase our emphasis on novel biology and personalised healthcare and we will continue to partner with leading academic institutions to increase our understanding of disease biology,’ he added.

‘By maximising the potential of the assets in our hands today we will navigate a period of revenue decline during which some of our major products are scheduled to lose exclusivity. Through this organic strategy we will target a return to growth.’

By maximising the potential of the assets in our hands today we will navigate a period of revenue decline during which some of our major products are scheduled to lose exclusivity

This strategy will focus investment and resources on five key growth platforms: capturing the multi-billion dollar potential of cardiovascular medicine Brilinta; working with BMS to achieve a leading position in the non-insulin diabetes market; investing to drive growth in emerging markets, of which China offers the biggest single opportunity; maximising the potential of its on-market respiratory portfolio, and accelerating its pipeline of respiratory projects; and capturing the potential from established brands and new launches in Japan.

‘Based on our focused investment in key growth platforms and our pipeline, we believe we can significantly exceed current market consensus for 2018 revenues of $21.5bn,’ Soriot concluded.