AstraZeneca will be cutting a further 2,300 jobs as part of its selling, general and administrative expenses activities restructuring programme.
IHS Global Insight perspective | |
Significance | UK firm AstraZeneca has announced another 2,300 job cuts worldwide that are to be associated with the restructuring of its selling, general, and administrative expenses activities. |
Implications | The company has further identified certain strategic priorities with a view to returning to growth, such as progressing its Phase II portfolio with the aim of doubling the Phase III pipeline by 2016, and specifying three therapy areas towards which its research and development is to be focused. Five key growth platforms were also identified. |
Outlook | The restructuring programme being implemented by AstraZeneca is reflective of the company's efforts to address the issue of falling revenues and develop its product pipelines. |
UK-based pharma major AstraZeneca has announced the restructuring of its selling, general and administrative (SG&A) expenses activities, which will lead to around 2,300 job cuts worldwide. The SG&A restructuring is to be incorporated with the other two previously announced programmes, including the programme aimed at changing the R&D footprint, which will lead to 1,600 job cuts, and a Phase III restructuring programme, with 1,150 job cuts. The company expects to incur one-time restructuring costs of USD2.3 billion through the combined programme of changes.
Strategic priorities and key growth platforms
As part of its strategies to "return to growth and achieve scientific leadership", the company identified the following as its strategic priorities: "driving" the company's on-market growth platforms; continuing to progress its Phase II pipeline with a view to potentially double its Phase III pipeline by 2013; launching speciality products; focusing on "rebuilding its R&D [research and development] engine"; enabling business development and acquisitions that would help strengthen the pipeline further; and "simplifying the business and improving productivity".
In addition, the company identified three therapy areas towards which the company's R&D will be focused. These are respiratory, inflammation, and autoimmunity; cardiovascular and metabolic disease; and oncology. In infection and vaccines, and neuroscience, the company expects the investments to be primarily opportunity-driven.
Furthermore, AstraZeneca intends to increase the investment in lifecycle management of key products that are on-market and in late stages of development like Brilinta (ticagrelor), Forxiga (dapagliflozin), Bydureon (exenatide), and lesinurad (potential treatment for the chronic management of hyperuricaemia in patients with gout).
Given, the loss of exclusivity on some of its major products, the company has further specified the five key growth platforms on which its resources are to be focused in order to enable its return to growth:
- Ensuring Brilinta reaches patients who can benefit from it, capturing its multi-billion-dollar potential
- Working with its partner Bristol-Myers Squibb to achieve a leading position in the non-insulin diabetes market
- Investing to drive growth in emerging markets – of which China offers the biggest opportunity – targeting annual high single-digit revenue growth in emerging markets
- Maximising the potential of the company's on-market respiratory portfolio, which continues to grow in key markets, and accelerating the pipeline of respiratory projects
- Capturing the potential from established brands and new launches in Japan, the world's second largest pharmaceutical market, which is showing steady growth.
Outlook and implications
The announcement regarding the restructuring of SG&A activities along with the 2,300 associated job losses comes after the company earlier in the week announced the creation of strategic research centres and the moving of its headquarters to Cambridge, UK, with a resulting approximate 1,600 job cuts (see United Kingdom: 19 March 2013: AstraZeneca to create strategic R&D centres, move headquarters to Cambridge, UK). AstraZeneca had previously announced in early 2012 that it would be cutting 7,300 jobs by the end of 2014 (see United Kingdom: 2 February 2012: AstraZeneca to Axe 7,300 Jobs After Posting Disappointing 2011 Results). Thus, as cited by The Guardian, with the current move, the overall job cuts of the company, which employs 51,700 people, would amount to 11,000 in the past 13 months.
The job cuts come as a result of the programmes that have been initiated by AstraZeneca with the aim to streamline its restructuring of business processes and to streamline its R&D activities in order to improve productivity. The company has been facing a challenging period for some time now, with falling revenues caused by maturity of its products, as well as problems with its product pipeline.
Thus, focusing its R&D on certain key areas, progressing its Phase II pipeline with the aim of doubling its Phase III pipeline by 2013, and the creation of strategic research centres as announced earlier reflects the company's efforts to address issues with pipeline scarcity.
Similarly, the priority of "leveraging business development and acquisitions" is in line with the string of development and research collaborations the company has entered into in the past several months (see United Kingdom - United States: 17 January 2013: AstraZeneca to collaborate with Vanderbilt University to develop treatments for major brain disorders and United Kingdom - South Korea: 21 December 2012: AstraZeneca enters into collaboration with LegoChem Biosceiences for antibiotic development).
In the near future, however, AstraZeneca's are potentially likely to continue to decline as the company focuses its efforts on rebuilding its pipeline and developing new products.