Healthy Skepticism Library item: 8201

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Lavelle E.
AstraZeneca to Cut 3,000 Jobs on Generic Competition
Bloomberg.com 2007 Feb 1
http://www.bloomberg.com/apps/news?pid=20601202&sid=aUO3334f5JcU&refer=healthcare

Full text:

Feb. 1 (Bloomberg) — AstraZeneca Plc will eliminate 3,000 jobs, or about 4.6 percent of the workforce, as the U.K. drugmaker reduces expenses to counter competition from copycat versions of its best-selling blood pressure medicine.

The cuts will come in the next three years and result in charges of about $500 million, London-based AstraZeneca said today. The company said fourth-quarter profit jumped 17 percent.

AstraZeneca is trimming jobs as sales of its Toprol-XL hypertension drug decline because of competition from copycat versions. The company spent almost $2 billion on acquisitions and experimental products in 2006, when it stopped work on the blood thinner Exanta, stroke treatment NXY-059 and Galida for diabetes. Last month, Pfizer Inc., the world’s largest drugmaker, said it would eliminate 10 percent of its workforce.

``What do you do when you face a big product drop and you can’t fill the gap with new products? Cutting jobs is one way to act on costs if you can’t act on revenue,’‘ Eric le Berrigaud, in an analyst at Raymond James in Paris, said. ``They don’t have enough new products coming through.’‘

AstraZeneca said it will earn $3.80 to $4.05 per share in 2007. At the high end of the forecast, AstraZeneca’s growth would be the slowest in five years, on a per-share basis, according to Bloomberg data.

Quarterly Profit

Fourth-quarter profit was helped by sales of ulcer drug Nexium and Seroquel for schizophrenia. Net income rose to $1.43 billion, or 93 cents a share, from $1.22 billion, or 77 cents, a year earlier, the company said. The results matched the $1.43 billion median estimate of 10 analysts surveyed by Bloomberg.

Revenue climbed to $7.15 billion.

Shares of AstraZeneca rose 63 pence, or 2.2 percent, to 2,903 pence in London. The stock has risen 5.8 percent this year, beating the 16-member Bloomberg Europe Pharmaceutical Index, which has gained about 3.8 percent.

AstraZeneca has used techniques inspired by car and truckmakers to help reduce by 60 percent the time it takes to make a drug and lowered per-pill manufacturing costs by 5 percent a year at Soedertaelje, outside Stockholm. AstraZeneca reduced the number of jobs at the site by about 10 percent, and plans cutbacks to its 14,000-member workforce at 27 factories across the world.

The job cuts are likely to come from the manufacturing and distribution side of the business, Chief Executive Officer David Brennan said. He declined to say what countries will be affected.

Sales Jobs

The company eliminated ``several hundred’‘ contract sales jobs in the U.S., and invested in emerging markets including Brazil, China and in Asia-Pacific region, Brennan said. Chief Financial Officer Jon Symonds said the company plans to ``downsize our asset base.’‘

``As the marketplace changes and the environment changes, we clearly need to adapt,’‘ Brennan told reporters.

Job cuts are ``possibly an industry trend at this point,’‘ said Irina Stratan, an analyst at WestLB Equity Markets.

AstraZeneca has stopped work on eight therapeutic areas, including hypertension, Parkinson’s and multiple sclerosis, as it refocuses its research laboratories.

``We’re taking scientists out of those areas we’re exiting,’‘ John Patterson, head of development, said at a press conference. ``If they can work elsewhere, they will. If not, we will lose some.’‘

Some 25 percent of AstraZeneca’s 120 experimental compounds come from external alliances and this number may rise to 30 percent, Patterson said.

Expanding Markets

AstraZeneca, the U.K.‘s second-largest drugmaker after GlaxoSmithKline Plc, is expanding markets and uses of its older products to spur growth. It still plans to introduce Symbicort in the U.S. by mid-year, after receiving regulatory approval for the long-term treatment of asthma in patients 12 years or older. The medicine will compete with Glaxo’s Advair, the world’s third-best selling drug which had third-quarter sales of $1.5 billion.

Crestor sales benefited as AstraZeneca increased spending on advertising to $166.5 million in the year to November, according to recent data from Nielsen Monitor-Plus. Sales of the cholesterol pill nearly doubled to $625 million from $353 million in the quarter.

Crestor’s U.S. market share, at 9.6 percent in December, grew as the company used new data to show it reduced so-called bad cholesterol by 70 percent when taken with Schering-Plough Corp.‘s Zetia. The studies have helped reduce safety concerns about the medicine.

``We have high ambitions for Crestor but I don’t want to put a figure’‘ on its potential U.S. market share, Brennan said.

AGI-1067 Filing

AstraZeneca said it is planning to file heart treatment AGI- 1067 with the Food and Drug Administration by the end of the third quarter and with European regulators in the fourth quarter. AGI-1067 is the only experimental product the drugmaker plans to send to regulators this year.

In June, AstraZeneca said it would file with both regulators in the first half of this year. Patterson today called AGI-1067 ``a high risk, high reward’‘ project, and said data from a late- stage study is likely to be presented by the end of the first quarter.

The U.K. drugmaker is seeking new uses of anti-psychotic Seroquel to help growth in the $19 billion depression market, amid patent challenges. It is awaiting U.S. approval of a once-a- day version of the medicine, which would have patent protection till 2017, and plans to seek permission for its use in generalized anxiety and major depressive disorder in 2009.

Seroquel had sales $912 million in the quarter, higher than the 910 million forecast by 10 analysts.

In the fourth quarter, the company delayed development of an experimental sepsis treatment. U.S. sales of Toprol XL fell 20 percent as copycat versions entered the market.

To contact the reporter on this story: Etain Lavelle in London at at elavelle1@bloomberg.net .