PhillyPharma

AstraZeneca to cut 7,300 more jobs amid fourth-quarter profit drop

Drug-maker AstraZeneca, with facilities in Wilmington and Newark, Del., said it will cut 7,300 more jobs because of declining fourth-quarter profit and prospects for 2012.

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AstraZeneca to cut 7,300 more jobs amid fourth-quarter profit drop

POSTED: Thursday, February 2, 2012, 4:23 AM

David Sell

AstraZeneca, based in London but with facilities in Wilmington and Newark, Del., said Thursday morning that it will cut 7,300 more jobs worldwide because of declining fourth-quarter profit and prospects for less revenue in 2012 in its pharmaceutical business.

Chief Executive David Brennan attributed the struggles to generic competition brought on by branded drug patents expiring and government insurance programs reducing reimbursements.

"While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, R&D based strategy, and today we have announced further steps to drive productivity in all areas to improve returns on our investment in innovation,” Brennan said in a statement.

The company said research and development operations would close at facilities in Montreal and Sodertalje, Sweden, with a net impact of 2,200 job cuts.

Beyond that, officials would not specify how many cuts will occur at other facilities. But in a conference call with reporters, Brennan said there would not be the same sort of big changes to R&D in Delaware.

"Wilmington continues to be very important to us, especially in clinical development, and we expect it to be for the foreseeable future," Brennan said.

In trying for greater cost efficiency, the company is reducing the regional management groups from five to three - North America, Europe and Asia/Pacific.

Tony Zook, the executive vice president of global commercialization, said the Wilmington office will handle the North American regional chores, adding Canada and Latin America. The Wilmington office had cuts late in 2011. This shift won't greatly change the workforce in Wilmington, Zook said.

The cuts announced Monday are the third set of layoffs since 2007 and will bring the three-part total to 28,900. The two previous rounds of layoffs involved 12,600 and 9,000 employees, respectively.

Thursday's layoffs would be in the supply chain, sales, administration, and research and development, with an estimated yearly cost savings of $1.6 billion by the end of 2014.

AstraZeneca reported a 2011 full-year operating profit increase of 11 percent, but a fourth-quarter drop of 10 percent. The full-year revenue for 2011 increased by 1 percent, but only because currency exchange rates.

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Comments (23)

0 like this / 0 don't • Posted 9:13 AM, 02/02/2012

What does Obama remotely have to do with the model of big blockbuster drugs coming to a grinding halt and the failed business model of Big Pharma? Health care reform also has little impact on pharmaceutical spending one way or another either so far. Typical nonsense you see so often.

— MG77

0 like this / 0 don't • Posted 10:52 AM, 02/02/2012

mg77. i was thinking the same thing. Blaming Obama is little more than a lame excuse for having no knowledge of the business side of the pharma industy. Since its no secret that most big pharma companies have been attempting to retool their business models for decades with little success, a broad swipe "it obamas fault" shows only a vauge understanding of the issues.

— tdoc

0 like this / 0 don't • Posted 11:48 AM, 02/02/2012

Didn't Big Pharma give a huge concession in pricing to the Government? That concession KILLED JOBS! That's what Obama and Obamacare has to do with this!!!

— gone with the wind

0 like this / 0 don't • Posted 1:05 PM, 02/03/2012

Your post shows a complete lack of knowledge of Pharma. The lion's share of the jobs lost had nothing to do with ObamaCare and most occurred long before Obama was in office. Big Pharma has moved much of their manufacturing and R&D to China & India which led to a loss of US jobs. As tdoc & MG77 alluded to the industry was not developing blockbuster drugs like they did in the 80's this led to a reduction in sales & marketing jobs. As for pricing concessions, Pharma sells their products to other countries at a much cheaper rate than here. The international price constraints along with your managed care health plan requirements that generics be used 1st line affected the bottom line far more than Obamacare (which btw isn't really in place yet)

As much as people like you love to make things political, this is an industry issue not a political one.

— mtairy1