Alexion plots hundreds of layoffs, HQ move in sweeping corporate revamp

Boston Harbor
Alexion announced plans to move its headquarters to Boston on Tuesday.

Alexion’s new management team is rolling out an overhaul that includes cutting 20% of its staff, or up to 625 people, and moving its headquarters to Boston's biopharma hub.

Previously based in New Haven, Connecticut, the biotech will close multiple manufacturing facilities and regional and country offices, according to the Tuesday announcement. Cuts will also hit the R&D organization, which already restructured once this year in moves that claimed about 200 jobs.

At the end of 2016, Alexion employed 3,121 people, meaning the cuts could affect about 625 staffers. The reductions will take place over the next 12 months, executives said on a Tuesday conference call.

All told, the company expects to save about $250 million in annual expenses by 2019. The restructuring will cost $340 to $440 million, CFO Paul Clancy told analysts.

RELATED: Alexion brings on former Baxalta chief Hantson to fill vacant CEO spot

The restructuring comes after Alexion overturned much of its C-suite in the wake of a sales fraud investigation that found higher-ups pressured staff to pad sales of lead medication Soliris. After that scandal, the company brought in former Baxalta helmsman Ludwig Hantson to right the course. He soon made his own executive hires to form the company’s new management team.

On a conference call Tuesday morning, Hantson said the corporate overhaul is intended to help Alexion grow its rare disease business, focus R&D efforts, pursue business development opportunities and reorganize its infrastructure.

In manufacturing, the company plans to begin closing its Rhode Island site this year because it isn’t able to be a “multiproduct” facility, Hantson said. The site currently makes lead drug Soliris and is slated to close by mid-2018. The site, with about 250 workers, has a history of manufacturing lapses. It was issued a Form 483 with three observations last August. 

RELATED: Alexion's C-suite overhaul continues as CFO, R&D chief exit, new commercial head enters

Going forward, the company plans to lean on production sites and contractors in the U.S. and is looking toward completion of a $100 million facility it is building in Ireland. Executives said Alexion is looking to reshape its manufacturing network to support current products and future launches, particularly ALXN1210 to treat paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome.

With savings from the restructuring, Alexion will reinvest $100 million in business development and R&D to beef up its pipeline. The company also plans to support an expected refractory generalized myasthenia gravis launch for Soliris by boosting sales staff in U.S., Germany and Japan.

RELATED: Alexion making €100M Ireland plant investment

In moving to Boston, Alexion is joining many of its biopharma peers who have shut down or downsized at locations around the country to set up shop in the scientific hub. Boston will give the biotech access to a larger talent pool and partners to support R&D, Hantson said.

In recent months and years, companies such as Takeda and Merck KGaA have boosted their presence there. Other drugmakers including Amgen, Biogen, Novartis, Pfizer and Sanofi are just a few of the major players in the area.