AZ blames German pricing for 400 job cuts

AstraZeneca ($AZN) is joining the line-up of drugmakers cutting jobs in Germany. Like the others, AstraZeneca cites the usual economic reasons, but adds a political twist. Also to blame for 400 job cuts? "[M]assive state intervention in the pricing of innovative medicines," the company says.

The U.K.-based drugmaker says it's planning to shrink its payroll by 400, leaving its German workforce at 625. But it wants to avoid outright layoffs, so, at a staff meeting today, it's offering voluntary severance and early retirements. The buyout offers follow a previous program announced in September, which 250 workers accepted, the statement says.

All of this is pretty boilerplate for a job-cutting plan. Every one of AstraZeneca's rivals has engineered a similar program over the past couple of years. The difference here lies in the company's case for shedding jobs. That "massive" change in Germany's drug-pricing scheme, along with mandatory 16% discounts, are expected to cost the company €300 million ($392 million) from August 2010 through the end of this year.

Citing Germany's new prove-it-or-lose-it pricing program isn't brand-new; Pfizer ($PFE) hinted at it when announcing job cuts last year. "The healthcare policy environment has clearly clouded the expectations for future business," the company said at the time. AstraZeneca, however, has obviously been quite explicit about parceling at least some blame to the new policies.

The company did also mention that R&D setbacks and European economic travails both figured in to the decision to cut jobs. Truthfully, the company has plenty of problems to face these days. CEO Pascal Soriot is expected to lay out a new strategy next month. But in the meantime, talking European politics is a suitable diversion.

- read the AstraZeneca release (German)
- check out the Handelsblatt story

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