AstraZeneca slashes 3,000 jobs

Anglo-Swedish pharmaceutical company, AstraZeneca (AZ), has revealed it will cut approximately 3,000 jobs, or nearly five percent of its total worldwide staff.

AZ says the firings will guarantee future revenue growth, as generic drug launches impact sales and its branded drugs go off-patent. Most of the cuts will be made in manufacturing facilities, while the job cuts could cost up to USD 500 million (EUR 385.4 million/ GBP 254.1 million) in charges.

The news follows a 10 per cent cut in workforce from the world's largest pharmaceutical firm, Pfizer, as Big Pharma comes under pressure from generic copycat drugs, failing product pipelines and regulatory moves from governments to cut drug prices and reduce healthcare costs generally.

In other news, on 5 February 2007, AZ paid USD 20 million (GBP 10.2 million/ EUR 15.4 million) to US drug developer, Regeneron Pharmaceuticals, along with annual payments for a non-exclusive license to use its VelocImmune monoclonal antibody technology. The agreement also calls for up to five annual payments of USD 20 million, although AZ can cancel the agreement after the first three. AZ will pay Regeneron a royalty single-digit percentage royalty on any products developed from the technology.

Regeneron said the VelocImmune technology generates fully human monoclonal antibodies, which can be used to develop biotech drugs. Monoclonal antibodies are infection-attacking proteins in the immune system that are identical because they are made from one type of immune cell.

AZ reported a 28 per cent rise 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). For the fourth quarter, AZ's profit rose to USD 0.93 per share from USD 0.77 a year earlier, as sales rose 14 per cent from a year ago to USD 7.15 billion.

AZ revealed it expected 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. The company also said it would pay USD 150 million (EUR 115.6 million/ GBP 76.2 million) for UK biotechnology firm, Arrow Therapeutics, whose antiviral drugs include a hepatitis C virus.

Analysts have reported that other companies could follow suit, including France's largest drug maker, sanofi-aventis, which like AZ and Pfizer, is facing continuing generic threats to its drug portfolio. It is unclear how these cost-saving measures fit strategically with sanofi-aventis' recently announced intention to merge with US pharma company, Bristol-Myers Squibb, however.

AZ shares closed GBP 0.63 higher at GBP 29.00 on 1 February. A USD 4 billion (EUR 3.1 billion/ GBP 2 billion) share buy back programme and a dividend also helped boost the values.