7,300 face layoffs as AstraZeneca announces restructuring program

In the latest in a recent swath of significant layoffs, AstraZeneca has announced that in an effort to restructure its business, about 7,300 employees are to be laid off.

Kelsey Kaustinen
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WILMINGTON, Del.—Though more jobs might be getting added tothe market overall, there's little evidence of that in the pharmaceuticalindustry. In the latest in a recent swath of significant layoffs, AstraZenecahas announced that in an effort to restructure its business, an estimated 7,300employees are to be laid off. The company hopes that the restructuring willbolster its productivity as well as its commercial, operations and research anddevelopment capabilities.
"AstraZeneca remains fully committed to our long-term,focused, innovation-driven biopharmaceutical strategy," David Brennan, ChiefExecutive Officer of AstraZeneca, said in a press release. "Since 2007, when weannounced our first major restructuring program, we have taken decisive stepsto improve returns on investment, recognizing that this demands concerted,enterprise-wide action. Today's initiatives should be seen in this strategiccontext as we continue to reshape our business to improve productivity andinnovation and with it our long-term ability to compete in a rapidly changinghealthcare environment."
The restructuring will result in workforce reductions inseveral areas of AstraZeneca's business. Within the selling, general andadministrative area, AstraZeneca plans to simplify its global commercialorganization structure, reducing the number of sales and marketing regions fromfive to three and clustering smaller countries. New customer channels are alsobeing implemented. AstraZeneca expects that approximately 3,750 positions willbe affected within the selling, general and administrative quarter.
Further changes will also be made in research anddevelopment, with the company aiming for a more flexible cost base. AstraZenecawill still be pursuing neuroscience as one of its key areas, including thecreation of a "virtual" neuroscience Innovative Medicines unit (iMed), whichwill feature a team of 40 to 50 scientists. The company hopes that by combiningits internal expertise with external scientific experience, it will be possibleto pursue this area while offsetting the difficulty of finding effectivetreatments for neurological disorders.
"We've made an active choice to stay in neuroscience thoughwe will work very differently to share cost, risk and reward with partners inthis especially challenging but important field of medical research," MartinMackay, President of Research and Development for AstraZeneca, said in a pressrelease. "The creation of a virtual neuroscience iMed will make us more agilescientifically and financially – we will be able to collaborate flexibly withthe best scientific expertise, wherever it exists in the world."
The change will result in the cessation of research anddevelopment activity at AstraZeneca's sites in Södertälje, Sweden and Montreal,resulting in the closing of the Montreal facility and the loss of approximately2,200 jobs globally.
Operations will also face workforce reductions asAstraZeneca aims to streamline its supply chain and outsource parts of itsmanufacturing activity, with approximately 1,350 positions to be affected.
All told, the new restructuring program is expected to costapproximately $2.1 billion and result in approximately $1.6 billion in annualbenefits by the end of 2014. Brennan noted in AstraZeneca's quarterly resultsreport that "the further expected losses of market exclusivity make for achallenging 2012 outlook," but the company is "committed to a long-term,focused, R&D based strategy, and today we have announced further steps todrive productivity in all areas to improve returns on our investment ininnovation."
"We are acutely aware that these decisions will affect manyemployees and we will strive to support our people as we implement thesechanges," said Brennan of the layoffs.
SOURCE: AstraZeneca press release

Kelsey Kaustinen

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