LONDON – AstraZeneca plc is once again taking the ax to its R&D operations, announcing plans to relocate 2,500 roles and cut about 1,600 jobs, mainly in the UK and U.S., as it consolidates discovery and development in Cambridge, UK; Gaithersburg, Maryland; and Mölndal, near Gothenburg, in Sweden.
The recently appointed CEO of AstraZeneca, Pascal Soriot said the aim is to increase the company's R&D productivity. The changes "put science at the heart of everything we do," he said. This will "accelerate innovation" and allow the company to "tap into bioscience hotspots."
The bill will be $1.4 billion in one-time restructuring costs, in addition to the $500 million capital investment in Cambridge. But the promised cost savings of $190 million per annum by 2016 will look paltry if the reorganization does not succeed in boosting R&D productivity.
There will be a loss of 1,600 R&D jobs at the firm's largest research site at Alderley Park, Cheshire, in the UK, and of 1 ,200 R&D jobs in Wilmington, Del., from where the Global Medicines Development Group and global marketing and U.S. speciality care functions will be relocated to the MedImmune site in Gaithersburg.
Softening the blow in the UK, the centerpiece of the restructuring is a plan to invest $500 million in a purpose-built facility in Cambridge, close to the company's existing MedImmune site. All current UK-based small-molecule and biologic drugs R&D will be consolidated here, with many of the jobs from Alderley Park moving to the new facility. Around 700 non-R&D posts will remain at Alderley Park when the restructuring is complete. The 350-strong corporate headquarters, currently based in London, also will be moved to Cambridge by 2016.
This mixing of small-molecule and biologics activities will be replicated at the MedImmune headquarters in Gaithersburg, while Mölndal, near Gothenburg, will continue to be a global center for research and development, with a primary focus on small molecules. AstraZeneca's site in Boston is not affected and will continue to work on small-molecule drugs.
Overall in the U.S., there will be a net increase of 300 jobs in Gaithersburg, set against a reduction of 650 jobs in the U.S. as a whole. Wilmington will remain as the North America commercial headquarters with 2,000 staff.
It is hoped the new R&D organization will achieve the savings by locating more of the company's scientists close to globally recognized life sciences clusters, making it easier to access leading academics and opportunities for partnerships; by bringing AstraZeneca teams together to improve collaboration; and by simplifying the company's footprint and reducing complexity.
AstraZeneca is due to hold an investor day on Thursday when Soriot, who joined AstraZeneca in October 2012 from F. Hoffman-La Roche, can put more flesh on his proposal to turn around the company's prospects. Mick Cooper, analyst at Edison Investment Research in London, said time will tell if Soriot's efforts are more effective than those of his predecessor David Brennan, who two years ago announced 2,200 R&D jobs were to go with the closure of facilities in Soedertaelje in Sweden and Montreal.
That cut came just a year after the announcement in 2010 of the closure of R&D sites at Charnwood, UK, and Lund, Sweden, along with the ending of early stage discovery work at Wilmington and the withdrawal from discovery research in 10 therapeutic areas, with the loss of 3,500 R&D positions.
The Brennan restructurings are still playing out, with the changes set in train not due to complete until 2014. Cooper said, "It will be vital to establish a stable working environment after [Soriot's] restructuring, following all of the changes that have occurred at AstraZeneca in recent years."
There was a mixed reaction to the news in the UK. John Hardy, a professor of neuroscience at University College London said it is a "terrible blow" to the UK pharma industry. While there are many interrelated causes, two of the main ones are a failure to make long-term investments in drug development pipelines and a hostile regulatory climate toward animal, especially rodent, research. "Poor leadership and heavy-handed regulation are undoubtedly part of the problem," Hardy said.
Similarly, Mark Downs, chief executive of the Society of Biology, which represents a number of life sciences learned societies, said, "It is a sad day for many in the UK's pharmaceutical industry." Coming on top of the closure two years ago of Pfizer's R&D center in Sandwich, UK, where 2,400 people were employed, the announcement of at least 700 job losses at AstraZeneca "risks further reducing the UK's collective capability" in drug development, Downs said.
The UK's Science Minister, David Willetts, was looking on the bright side, taking the decision to invest in Cambridge as a sign that the government policy for life sciences is succeeding, despite the cuts at Alderley Park, where pharmaceutical research has been carried out since the 1950s. The site, which has more than 3,000 staff, is a global lead center for cancer research, with the roll call of drugs developed there including Iressa, Nolvadex and Zoladex. It was also here that James Black discovered beta-blockers.
"AstraZeneca's decision to invest $500 million in a world-leading R&D facility in Cambridge is a real vote of confidence in the UK life sciences sector," Willetts said. The company chose to make this investment after considering options around the world, he claimed.
The government will work with AstraZeneca to find new opportunities for the Alderley Park site and a task force will be established to coordinate work to support staff and the local economy during the transition.
One thing that the restructuring highlights is how biologics are becoming the fulcrum of the pharmaceutical industry, with MedImmune facilities now forming the core of AstraZeneca's future R&D strategy.