AstraZeneca cuts jobs but invests up to $1bn in obesity and antiviral drugs
and pulmonary disease drugs as part of a continuing effort to
restructure its business.
In terms of sales, AstraZeneca is the fourth largest pharma company in the world. However, this hasn't prevented it from announcing its intention to cut 3,000 jobs in an effort to increase productivity and reduce costs. Meanwhile, the pharma giant continues to refocus its pipeline and this week has committed to spending up to $1bn (€768m) having bought Arrow Therapeutics and signed two further licensing deals.
The move is another example of a big pharmaceutical company restructuring their business and supply chain as a result of challenges currently confronting the industry in terms of patent expirations, cheaper outsourcing and threats from generic competition.
David Brennan, AstraZeneca CEO, sees the move as the latest step in an ongoing programme aiming at increased productivity and cost efficiency.
He said: "Our asset rationalisation programme is now in place. We have to start looking across our entire business more aggressively to make sure that we're doing everything we can to utilise all of our resources in the best possible way."
Strengthening product pipelines also seems to be a key objective for pharmas hoping to maintain their positions in the industry. Competition from generics and block-buster drugs coming off patent are just two factors likely to have a significant impact on drug manufacturers and the pharma industry as a whole.
"Strengthening the pipeline, by enhancing our internal discovery and development and continued pursuit of external opportunities, remains the number one priority for the company," confirmed AstraZeneca.
AstraZeneca has strengthened its pipeline in anti-infective compounds through the $150m acquisition of Arrow Therapeutics. The UK biotechnology company has developed drug candidates for hepatitis C virus (HCV) and respiratory syncytial virus (RSV).
Arrow's most advanced compound is RSV604 for the treatment of RSV. Currently in Phase II clinical trials, it was developed in collaboration with with Novartis. The company also has two HCV drug candidates that target the novel NS5a protein including A-831 in Phase I trials.
AstraZeneca said the deal "complements internal capabilities in anti-bacterials" within this area and anti-infection drugs is now one of the company's key therapeutic areas.
The company has also signed two licensing deals. The first is a possible $300m deal with Palatin Technologies to develop obesity drugs that target melanocortin receptors. The other deal could be worth up to $500m and is with Argenta Discovery. The pair will collaborate to discover improved bronchodilators to treat chronic obstructive pulmonary disease (COPD).
The deal will focus on finding long acting muscarinic (M3) antagonist (LAMA) and dual acting muscarinic inhibitor-beta2 agonist drugs (MABAs).
AstraZeneca's proposed job cuts represent 4.6 per cent of the firm's entire workforce, and come in the face of "challenges posed by patent expirations and pricing pressures from government and private sector players."
The cuts are part of a rationalisation plan anticipated to cost AstraZeneca around $500m (€384m) in accounting charges over the next three years.
Pfizer, the world's largest pharma company, also announced job cuts earlier this year. The company reduced its staff by almost 10,000 - 10 per cent of its global workforce - and shed 20 per cent of its European sales force in an attempt to save over $1bn by the end of 2008. Between 2003 and 2008, the company will have also reduced its network of manufacturing plants around the world from 93 to 48 as part of its cost-cutting strategies.
AstraZeneca's acquisition and licensing deals mirror increasing consolidation within the industry, with suggestions of mega-mergers such as the recent rumoured pairing of Bristol-Myers-Squibb and French firm Sanofi-aventis.
The generics sector has also been consolidating of late, and the market for these drugs has doubled in size since 2001. This is placing further pressures on pharmaceutical firms, many of which have been snapping up generics manufacturers in a bid to expand product portfolios and crowd out smaller competitors.
