AstraZeneca faces resistance to job cuts on home turf

With expiring patents undercutting revenues, the pharmaceutical industry has shed hundreds of thousands of jobs worldwide. And while it is always an unpleasant process, it is probably hardest when a company has to cut jobs on its home turf.

In the case of London-based AstraZeneca, ($AZN), which last week announced plans to eliminate 7,300 jobs while increasing its dividend to shareholders, resistance is brewing at R&D and manufacturing facilities in the U.K. Citing the damage the jobs losses will have to the U.K. economy, union leaders have vowed to resist cuts there.

"If the company can afford a 10 percent hike in its dividends, then it can afford to retain these roles," Linda McCulloch, a national labor leader, told the Manchester Evening News. The newspaper said between 250 and 350 jobs reportedly would be lost from the R&D department at Alderley Park, as much as 10% of the workforce of 3,500. There has been no announcement regarding Macclesfield, the group's second-largest manufacturing site with around 2,600 staff.

AstraZeneca said it will cut about 3,750 sales, general and administrative jobs, 2,200 positions in R&D, and another 1,350 in operations worldwide. These come on top of 24,000 job cuts globally by the company since 2009. The cuts are to take place over three years. The company also reported that it would increase its dividend 10%, amounting to an additional £2.9 billion to shareholders in 2012 on top of the £6 billion last year.

AstraZeneca has 8 facilities and about 8,000 employees in the U.K., including its London headquarters, according to Thomas Hushen, a spokesman for the company, told FiercePharmaManufacturing in an email. It has manufacturing facilities in Avlon, Speke and Macclesfield, which also includes information services and R&D. It has R&D facilities in Alderley Park and Cambridge, environmental research at Brixham and sales and marketing operations in Luton.

Hushen did not say what impact the labor resistance might have or if saving jobs in one area would mean deeper cuts in another location. "It is important to note that all of the estimated numbers provided last Thursday are subject to the requisite consultation process before they can be finalized, and that process is under way," he explained. "These are tough decisions. The changes we are making will help us to safeguard our long-term competitiveness and improve productivity."

The cuts come at a tough time for the U.K. pharmaceutical industry. Blogger Rowan Gardner recently said the country has gone from 26 major pharmaceutical and 6 agrochemical R&D facilities in 1985 employing 35,000 to two major pharmaceutical R&D facilities employing 5,500.

Raising a stink about job cuts in the home country actually resulted in a decision by Swiss drugmaker Novartis ($NVS) to save a plant and 320 jobs in Vaud and ease back on cuts in Basel, Pharmalot pointed out.

"Overall, Novartis firmly believes that the agreements now reached in Nyon are of great importance not only for the company, but also for Switzerland as a whole," making the country more attractive for international investment, Novartis said in a statement sent to FPM on Monday.

The Novartis statement also noted that the company expects to increase employment in Switzerland by 2,000 positions in coming years. The salvaging of jobs in Switzerland will not mean deeper cuts elsewhere; however, "across the Novartis Group, we are constantly looking for ways to reduce costs, improve productivity and absorb pricing pressures."

- check out the Manchester Evening News story
- see Pharmalot's insight
- get the Bloomberg story

Special Report: AstraZeneca - Top 10 pharma layoffs of 2011