Rumors of change at AstraZeneca have been rumbling through newspapers all week and yesterday the company finally revealed the details by releasing a statement about its restructuring initiatives “to drive productivity and support innovation”. It all sounds very high and important but basically it boils down to job cuts. And lots of them.
Although the statement doesn’t explicitly state the number of jobs that may go, it says that restructuring will “affect approximately 7300 positions”. If you’re an optimist, you may want to believe that a handful or so positions will be shuffled around, but, judging from past experience with Big Pharma companies we all know that the majority are likely to be let go.
Most of the “affected” positions (3750) will be in selling, general, and administrative areas. One change already underway at the company is the simplification of its global commercial organisation structure by reducing the number of its sales and marketing regions from five to three. Small countries have also been clumped together in a move that AstraZeneca hopes will optimise its resources by increasing shared services and reducing cost bases.
Another 2200 positions will come from R&D. The statement says, “The R&D function will accelerate its transformation, which the company unveiled in January 2010. Under the new programme announced today, further changes will create a simpler and more innovative R&D organization with a lower and more flexible cost base. Excess capacity in certain R&D functions will be reduced, matching resources to AstraZeneca’s more focused R&D portfolio.”
One of the main focuses for R&D restructuring will be in the company’s neuroscience area. Although AstraZeneca recognises that there is much need in this area for better medicines, it adds that advances have been “elusive”. In response, the company will close one R&D site in Montreal (Canada) and wind down R&D activity at its Södertälje (Sweden) site.
In a more positive note for neuroscience, however, the company added that it will continue to pursue innovation in this area by combining internal expertise with “innovative external science” using a virtual neuroscience Innovative Medicines (iMed) unit. The unit will be made up of around 40–50 AstraZeneca scientists, who will conduct discovery and development externally using a global network of academia and industry.
Martin Mackay, president of Research and Development, AstraZeneca, said: “We’ve made an active choice to stay in neuroscience though we will work very differently to share cost, risk and reward with partners in this especially challenging but important field of medical research,” Martin Mackay, AstraZeneca’s president of research and development, said in the statement. “The creation of a virtual neuroscience iMed will make us more agile scientifically and financially – we will be able to collaborate flexibly with the best scientific expertise, wherever it exists in the world.”
The remaining job cuts will be in operations as AstraZeneca seeks to make its supply chain more efficient. In particular, the company says it will be looking at its support functions.
The restructuring is expected to deliver around $1.6 billion in annual benefits by the end of 2014, but that will be little consolation for those losing their jobs. An article in the Wall Street journal estimates that around 30000 jobs have been lost at AstraZeneca over the past five years.