AstraZeneca, the Anglo-Swedish pharmaceutical group, is gearing up for one of the biggest shake-ups witnessed in the industry.
The company plans to cut 8,000 more pharmaceutical jobs worldwide by 2014. The new cuts follow the loss of 12,600 roles at the group since 2007.
Enhancing productivity
The company highlighted that driving increased productivity from investments in research and development is key to portfolio renewal and value creation.
The company will undertake additional restructuring within the R&D function. These plans include a reduction in the number of disease area targets within its core therapeutic areas, a continued focus on externalisation, some consolidation of activities onto a smaller R&D site footprint, and other efficiency measures, subject to consultations with work councils, trades unions and other employee representatives and in accordance with local labour laws.
These initiatives are designed to achieve material efficiency savings in R&D, which will partially mitigate the increase in R&D investment that would be required as projects in the current pipeline progress to the more resource intensive, later phases of development. By 2014, annual savings of $1 billion should be realised, of which one-half is estimated to be cost savings and the other half cost avoidance.
An AstraZeneca spokeswoman said the company had yet to reveal how many UK positions would be affected. The latest global cuts are to take place across the firm’s sales and marketing, business infrastructure, research and development (R&D), and supply chain operations. The company also said that some R&D sites may close.
Future
In 2009, AstraZeneca’s revenues rose 7% to $32,804 million at constant exchange rates.
For the period 2010 to 2014, the company has made certain assumptions for the industry environment. The company assumes that the global biopharmaceutical industry can grow at least in line with real GDP over the planning horizon. Downward pressure on revenue from government interventions in the marketplace, including certain proposals associated with efforts to enact US healthcare reform, remain a continuing feature of the challenging market environment; however, for the planning period, the company assumes no further “stepchange” in the evolution of these pressures.
The company’s planning assumption is that revenue will be in the range of $28 billion to $34 billion per annum over the next five years. It is expected that a significant portion of current base revenue will be affected by the loss of market exclusivity on a number of products.
Revenue in 2010 will be affected by the expected loss of market exclusivity for Arimidex and for Pulmicort Respules in the US. Compared to a 2009 revenue baseline that included unanticipated contributions from US sales of Toprol-XL and H1N1 pandemic influenza vaccine, the company expects up to a mid single-digit decline in revenue in 2010 on a constant currency basis.
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