Struggling Anglo-Swedish drugmaker AstraZeneca says it will eliminate 1600 jobs, mostly in the United States and Britain, as its new chief executive starts a major research and development reorganisation.
The cuts, meant to reduce costs and make research programmes more productive, come just weeks after the company reported big drops in revenue and net income for 2012 and forecast continuing difficulties as generic competition hurts sales.
The job reductions amount to nearly 3 per cent of AstraZeneca's 57,200 workers worldwide and are part of moves affecting several major AstraZeneca sites in Britain, the US and Sweden.
Even the global headquarters will be shifted, from London to Cambridge, as the company moves many of its scientists near top centres for bioscience research. Rivals have been doing the same, to be near those talent pools and to increase collaborations with scientists at universities and small biotech companies.
The changes, to be made between now and 2016, are expected to produce annual savings of about US$190 million by then. They will result in restructuring charges of US$1.4 billion, about US$800 million of that likely to be in cash.
"Given the limited financial benefits, this deal is really about improving science, and the ability to capture innovation and recruit top-tier scientists," said Citigroup analyst Mark Dainty. "The pay-off is likely to take several years to be realised but is evidence of sensible organisational change, in our view."
In the US, AstraZeneca will scale back its site in Wilmington, Delaware, by about 1200 jobs. That includes eliminating 650 positions and shifting 300 others as key functions are transferred to Gaithersburg, Maryland, home to AstraZeneca's MedImmune subsidiary and research on biologic drugs, injected medicines produced in living cells rather than by mixing chemicals.
In Britain, AstraZeneca said most of the corporate and global commercial functions based in London would move to a new US$500 million site being built in Cambridge. The company will consolidate all its British pill and biologic drug research in Cambridge, which is known for innovation in the biological sciences and links to key research institutions in London.
"This is a major investment in the future of this company that will enable us to accelerate innovation by improving collaboration, reducing complexity and speeding up decision-making," said chief executive Pascal Soriot, who took over last August after his predecessor resigned.