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AstraZeneca to cut 7,300 jobs as growth stalls

Published on 02/02/12 at 09:59am
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AstraZeneca will make 7,300 cuts to its sales and R&D staff by 2014, but the company has not yet said what countries will be affected. 

AZ said it would pay out around $2.1 billion for the lay offs, with $261 million being charged in the fourth quarter of 2011. 

But the firm expects these cuts to bring in $1.6 billion in annual benefits by the end of 2014, which will help offset the loss from generic competition to its biggest drugs.   

The company said that around 3,750 positions would be cut from sales and administration posts, with around 2,200 coming from R&D. The remaining 1,350 will come from operations, the firm said.

The GMB Union has said 250 to 300 of the cuts will be in R&D at the firm's site in Alderley Park, Cheshire, but this has not yet been confirmed.

AZ said in a statement: “Our priority in the coming weeks will be to work with our affected employees on the proposed changes, acting in accordance with relevant local consultation requirements and labour laws.”

Speculations about the cuts have been gathering pace in recent days, but today’s figure is over double what had been rumoured.

This is now the third phase of cuts from the AZ. The Anglo-Swedish firm axed 12,600 jobs between 2007 and 2009, and began a second phase of cuts in 2010, which will see an additional 9,000 staff lose their jobs by 2014.  

All told, the firm will lose nearly 29,000 staff by 2014, bringing its total staff level down to 53,700.

Full year results 

The announcement comes as the firm released its full year results for 2011, which saw revenue drop by 2% to $33.6 billion at constant exchange rates.

This drop reflects the loss of around $2 billion from generic competition and a further $1 billion from government price cuts across developed markets, AZ said.

The year ahead will only get tougher for the firm: the antipsychotic Seroquel, its second-biggest selling drug, will lose exclusivity in the US in March and will start to lose its European patents throughout the year. 

It has also had problems with its drug pipeline after it scrapped an ovarian cancer drug in December, and saw poor results for an investigational antidepressant.

AstraZeneca now expects recently launched products and the pipeline to contribute just $2 - 4 billion to sales by 2014, down from $3 - 5 billion estimated a year ago. 

Core earnings will also be affected this year, and are forecast to be between $6.00 and $6.30 a share by the company, down from $7.28 in 2011.

David Brennan, chief executive of AZ, said: “Disciplined execution of our strategy has delivered a good performance in 2011 in the face of intensified pricing pressure and generic competition.

“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.”

Ben Adams 

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