AstraZeneca is set to cut 1,600 jobs worldwide over three years as it overhauls research operations and consolidates drug development work in three major centres in the UK, the US and Sweden.
The job cuts comes a year after the London-based drug giant announced that it would reduce its global headcount by 7,300 by the end of 2014 as part of its cost savings plan. (See: AstraZeneca eliminates 7,300 jobs in major restructuring)
Newly appointed CEO Pascal Soriot, who will present his detailed strategy for the group to investors on 21 March, said the overhaul would lead to $1.4 billion in one-time restructuring charges, with annualised benefits for the overhaul expected to reach approximately $190 million by 2016.
The current job cuts, equivalent to 2.8 per cent of its global work force of 57,000, would include 700 in the UK and around 650 in the US.
The Anglo-Swedish company will close its research and development site at Alderley Park in Cheshire and relocate to a new facility in Cambridge to be built by 2016 at an investment of $500 million.
Cambridge will also become AstraZeneca's new global corporate headquarters.
The move would see drug development end at the company's Alderley Park, which has, for many years been a hub of the group's research and development (R&D) efforts, AstraZeneca said in a statement yesterday.
The decision to stop drug research at Alderley Park, the company's largest R&D site, however, has come as a major blow to a region that had relied on a centre where AstraZeneca and its predecessor ICI had been engaged in drug-discovery research for over 40 years.
The company said the move would make it easier for the company to access world-class talent and opportunities for collaboration and partnerships and create "a more vibrant environment that puts science and the patient at the heart of everything the company does.''
Soriot who was at Roche before he took over in October said, this was a major investment in the future of the company, which would allow acceleration of innovation by improving collaboration, reducing complexity and speeding up decision-making.
Besides Cambridge, AstraZeneca said that its small molecule and biologics R&D activities will be concentrated in three strategic centres, Cambridge in the UK; Gaithersburg in the US; and Mölndal in Sweden.
The Gaithersburg facility is the site of MedImmune's headquarters and the primary location for AstraZeneca's biologics activities. This site will do most of the company's US-based Global Medicines Development activities for small and large molecules, while its Mölndal facility in Sweden will continue to be its global centre for research and development, with a primary focus on small molecules.
Soriot said, ''The changes we are proposing represent an exciting and important opportunity to put science at the heart of everything we do because our long-term success depends on improving R&D productivity and achieving scientific leadership.
AstraZeneca, which saw its profits fall by 35 per cent to $7.7 billion last year, is soon set to lose patent protection of some of its key prescription drugs that generate more than 40 per cent of its annual revenues and the company experiencing a series of setbacks in developing new products in recent years.
Patents for four AstraZeneca drugs - Seroquel IR (antipsychotic), Atacand (cardiovascular), Nexium (heartburn), and Merrem (antibiotic), which accounted for 85 per cent of the revenue decline are set to expire by the end of next year, while its best-selling cholesterol lowering drug Crestor, will lose its US patent protection in 2016.
Two versions of Seroquel that lost patent protection in March 2012 netted a combined $3 billion less in 2012 than 2011 due to low-cost generic versions in the market.
Last month AstraZeneca posted falling revenue and profit for 2012, and expects the trend to continue in 2013. Full-year revenue fell from $33.59 billion in 2011 to $27.97 billion in 2012, with net profit declining from $10.02 billion to $6.30 billion in the same period.