AstraZeneca cuts jobs in Sweden and UK

The UK's number two pharmaceutical company, AstraZeneca (AZ) has revealed it will cut 850 jobs in Sweden and 700 jobs in the UK, as part of cost cuts to guard earnings.

AZ said the staff cuts, part of a planned reduction of around 3,000 jobs or nearly five per cent of its work force, will take place over the next three years as tries to augment the efficiency of its Swedish and UK production units.

For Sweden, the company commented that it did not believe retirements and voluntary redundancies would address the staff reductions, adding it would consult with unions. The latest cuts come on top of a planned reduction of 450 jobs in Sweden in 2007, which the firm has said it expected to be able to handle without resorting to layoffs. The firm has around 12,800 employees in Sweden, of which 4,500 work in production.

In the UK, AZ is one of the most important employers in the north-west of England, with about 7,000 staff, according to a Financial Times report. Many are employed in the Alderley Park research and development site in Cheshire, which at present remains unaffected by the job cuts. The 700 job losses will be from the company's Macclesfield site and some from one of its Cheshire plants, which supplies products for all the company's therapeutic lines.

AZ previously announced that it was to cut 3,000 jobs in a three-year scheme, explaining that cost savings were necessary due to burgeoning generic competition and the impending loss of patent protection for its number one anti-ulcerant drug, Nexium (esomeprazole). In December 2006, approximately GBP 2 billion was wiped off the value of the company after EU authorities revoked a key patent on Nexium four years early. The existing patent originally protected the drug until 2014.

AZ has also revealed it will spend GBP 63.5 million (USD 124.8 million/ EUR 94.2 million) on the construction of a process R&D laboratory at its Macclesfield site, which has already received GBP 250 million of investment since 2001. The function of the existing facility is to launch new products, while it is also the sole global supplier for one of the company's oncology treatments.

The proposed new development will discover and develop manufacturing routes for active ingredients in new medicines and will house 170 staff, including multi-disciplinary teams of chemists, analysts and process engineers, as well as project managers. The new facility will have the capacity to be extended to house a further 50 people. The facility represents the largest single investment to date at the Cheshire site.

AZ's current global strategy is to strengthen its new drug pipeline, with the new facility to focus on the company's cancer and anti-infective R&D portfolio, as well as pipeline neurological treatments.

The new facility will link with other major R&D facilities in the UK to balance the company's global process R&D capacity. Construction will begin immediately and is scheduled to complete in Q3 2009.

AZ posted a 28 per cent increase in gross profits to rest at USD 8.5 billion in FY06. Sales were up 11 per cent at USD 26.5 billion, driven by its anti-ulcerant, Nexium (esomeprazole), statin Crestor (rosuvastatin) and the schizophrenia drug, Seroquel (quetiapine). AZ expects FY07 growth, posting a 33 per cent rise in earnings per share at USD 3.86 (EUR 2.98/ GBP 1.96), which met analyst expectations.