AstraZeneca’s $1.1 billion cost-cutting effort has taken its latest round of jobs. Facing the prospect of lower U.S. revenues next year, the company has pulled the trigger on “necessary, but difficult decisions” to chop 700 positions.
AstraZeneca will eliminate the jobs throughout its U.S. commercial organization and North American headquarters in Wilmington, DE, where about 120 positions have been cut, according to a spokesperson. The remaining are field-based sales and nonsales jobs.
“While these decisions are in the best interest of our future, this is a difficult time for our entire U.S. organization, particularly for the people who are directly impacted,” according to a company statement on Thursday. The cuts are specific to the U.S. commercial business.
London-based AstraZeneca is suffering under generic competition for two of its once-top sellers, stomach med Nexium, which faced its first copycats last year, and Crestor, the statin drug that's been losing ground to generics since May 2016.
The latest job cuts come days after AstraZeneca said it would move some U.K. finance jobs to Malaysia, Costa Rica and Poland as it works to consolidate back-office work in those three locations. Those moves are also part of the company's $1.1 billion cost-cutting effort first announced earlier this year.
“We will continue our commitment to treat all of our employees with respect and minimize disruption,” AZ’s statement said.
And Thursday’s cuts come amid a bad week overall for pharma jobs, with several of AZ’s peers announcing cutbacks. Mylan announced the biggest round, saying it’ll cut “less than 10%” of its global workforce of more than 35,000 employees. Endo has announced layoffs of 375 sales employees, and up to 80 staffers at Perrigo face the ax.
AstraZeneca's current struggles hinge on the demise of Crestor. Though the company has some promising new drugs helping to fill the gap, including cancer-fighter Lynparza, they're not enough to make up for Nexium and Crestor, both longtime blockbusters. Nexium brought in $3 billion in 2014, before generics hit, and Crestor put up $5 billion last year, about 21% of the company's $23.6 billion in sales.
AstraZeneca’s U.S. revenue expectations also reflect pricing pressure in respiratory and diabetes, where payers are seeking to put a lid on costs by pitting drugmakers against each other for discounts.
"We continue to face loss of exclusivity impacts from many of our legacy products and work to compete in an ever-changing external environment," the company said in its statement.
So far this year, AstraZeneca has reported a core operating profit decrease of 12% in the first quarter, following that up with a 22% slide in in the second quarter and a 12% decline in the third quarter.
Part of its overhaul includes an effort to “reshape” the company’s manufacturing network as it looks to bolster its capacity in biologics and slim down elsewhere.