AstraZeneca will cut 650 U.S. employees as part of a global R&D restructuring that will shrink its global workforce by 1,600, mainly in the U.K. and U.S., while consolidating small molecule and biologics R&D in three newly named global centers—one each in the U.K., Sweden, and the U.S.—under a plan revealed today by CEO Pascal Soriot.
The troubled pharma giant hopes the moves will revive an R&D operation that has struggled in recent years to recover from several late-stage setbacks with experimental medicines the company had counted on to make up for sales revenues it is set to lose due to the “patent cliff” expiration of several brand-name drugs through the end of 2014.
AZ said the restructuring will benefit the company by positioning more scientists close to global biopharma clusters, improving the prospects for attracting talent and creating new collaborations, bringing more R&D teams closer together, and cutting costs by simplifying its global real estate footprint.
In all, AZ envisions relocating nearly 2,500 positions under a restructuring that it said will incur $1.4 billion in one-time restructuring charges, of which $800 million are likely to be cash costs. The company expects to enjoy about $190 million in annual savings by 2016, when the restructuring is expected to be fully implemented.
AstraZeneca said it would cut 1,200 jobs from its North American commercial headquarters in Wilmington, DE, leaving some 2,000 employees there—in part by relocating the Global Medicines Development group for small and large molecules to Gaithersburg, MD. The HQ site for the company’s MedImmune subsidiary and already the primary location for AstraZeneca’s biologics activities, Gaithersburg would also house what the company termed “some” global marketing and U.S. specialty care commercial functions to be relocated from Wilmington. In all, Gaithersburg would see about 300 additional employees based there.
Wilmington would also lose 170 employees who would be transferred to other AstraZeneca sites in the U.S. or overseas, while 650 jobs now based there would be eliminated.
AZ also plans to build a $500 million new R&D facility in Cambridge, U.K., which would become the company’s new global headquarters city. The facility is intended to build upon the company’s top-tier protein engineering capabilities already based in Cambridge.
The U.K.-based company would relocate its headquarters from its Paddington campus in London, where some 350 employees are now based. Most corporate and global commercial positions now based there would be shifted to Cambridge, enabling AZ to plan for closing the campus by 2016.
AZ also plans to end R&D work at its Alderley Park R&D campus in Cheshire, U.K. “The significant majority” of its approximately 1,600 R&D positions will be transferred to the new Cambridge facility, the company said, with the remainder to be shifted to its nearby Macclesfield manufacturing facility or other AZ sites overseas.
However, “at least 700 non-R&D roles” are expected to remain at Alderley Park, the company said, adding: “AstraZeneca is committed to exploring all options to ensure that Alderley Park has a successful future.”
The third new global R&D center would be at an existing R&D site in Mölndal, Sweden, near Gothenburg, which according to AZ will focus primarily on small molecules.
AZ said its strategic sites would be supported by other existing AstraZeneca facilities worldwide—including Boston, which the company said will continue to be an R&D center with a primary focus on small molecules.
“The changes we are proposing represent an exciting and important opportunity to put science at the heart of everything we do because our long-term success depends on improving R&D productivity and achieving scientific leadership,” Soriot said in a statement. “This is a major investment in the future of this company that will enable us to accelerate innovation by improving collaboration, reducing complexity, and speeding up decision-making.”