AstraZeneca to cut 2300 sales, administration jobs; details narrower research focus

AstraZeneca announced Thursday a restructuring of its sales and administration activities, which is expected to lead to the loss of around 2300 jobs globally. CEO Pascal Soriot also detailed the company’s new research focus in an effort to double the size of the drugmaker’s late-stage pipeline by 2016 without significantly increasing R&D spending.

The job cuts follow the announcement earlier this week that AstraZeneca will consolidate its R&D operations and trim around 1600 positions globally by 2016, with the majority being lost in the US and UK. In addition to the 1150 balance of the job cuts announced in February last year, the company expects to eliminate about 5050 roles by 2016, leading to estimated annual savings of approximately $800 million. The drugmaker said that it will incur associated restructuring charges of $2.3 billion.

Soriot, who said the company sees “no case for diversification,” noted that its new strategy will “concentrate our efforts and resources on our priority growth platforms and our priority pipeline projects.” Under the plan, the company will focus on three core areas: respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology. The drugmaker added that it will continue to “be active” in infection and vaccines, and in neuroscience, although “investments will be more opportunity-driven.”

The company highlighted its “strong” mid-stage biologics pipeline, that it plans to progress into late-stage development, and said it will also increase its focus on “novel biology and personalised healthcare.” AstraZeneca also Thursday announced an agreement with Moderna Therapeutics to develop cardiovascular, metabolic and cancer drugs, and a collaboration with the Karolinska Institutet to study cardiovascular, metabolic and regenerative medicine.

Commenting on the strategy update, Kepler Capital Markets analyst Fabian Wenner said “I’m disappointed because Pascal didn’t see a need for a quick fix,” such as an acquisition. The analyst remarked that “they’re confident in their existing pipeline assets and see no need for diversification. All the others are going for diversification because it takes the pressure off the R&D engine, which at AstraZeneca is broken.”

AstraZeneca also outlined Thursday its five growth platforms, which include Brilinta, its non-insulin diabetes drugs that are partnered with Bristol-Myers Squibb and its respiratory portfolio. The company also pointed to growth in emerging markets, with China offering the largest opportunity, and the potential for established and new products in Japan, which it said is “showing steady growth.”

In January, AstraZeneca suggested that sales will fall by a “mid- to high-single digit” percentage this year on increasing competition from generic medicines, while profit will decline “significantly” more than revenue. On Thursday, the company said it expects to “significantly exceed” the average market forecast for revenue of $21.5 billion in 2018.