Delaware Employees Nervous Over AstraZeneca PLC's $1 Billion Cost-Cutting Plans

May 3, 2016
By Alex Keown, BioSpace.com Breaking News Staff

WILMINGTON, Del. – With AstraZeneca looking at a restructuring plan to save more than $1 billion that is sure to include job cuts, company employees, including the 2,100 in Delaware, are anxiously waiting to see if pink slips will be issued to them.

Pascal Soirot, chief executive officer of London-based AstraZeneca, announced the company was undergoing a restructuring plan to net savings of about $1.1 billion by the end of 2017. The restructuring plan will involve a $1.5 billion one-off restructuring charge, with total restructuring charges expected to be $2.4 billion through the end of 2017. Most of the cuts will be outside of Britain and primarily in sales and manufacturing operations, DelawareOnline reported this morning. AstraZeneca employees in Delaware have reason to be nervous. Last year the company terminated a number of employees at its U.S. headquarters in Fairfax, Del. As part of previous cost-cutting measures. There are about 2,100 AstraZeneca employees in Delaware, but about 10 years ago, AstraZeneca employed about 5,000 in Delaware. In addition to the layoffs in Delaware, AstraZeneca also reduced its physical footprint, selling off or tearing down several facilities, DelawareOnline said.

AstraZeneca’s latest job cuts were announced in the wake of sagging earnings and stiffer competition, particularly for its ulcer drug Nexium and COPD drug Symbicort. AstraZeneca said sales for Nexium were down about 24 percent during the first quarter and sales for Symbicort were down about 7 percent. The company’s popular anti-cholesterol drug Crestor saw sales drop about 2 percent as well. Sales for Crestor could continue to drop as it will begin to face generic competition this week.

But things for AstraZeneca aren’t all bad, particularly when taking the company’s oncology drugs into account. Sales for Tagrisso, which was recently approved in Europe and Japan, is headed toward peak sales of $3 billion. Another cancer drug, Lynparza, for advanced ovarian cancer, has launched in 24 countries. Likewise, AstraZeneca recently saw regulatory approval of Bevespi Aerosphere for COPD in the U.S. and Zurampic for gout in Europe.

But while AstraZeneca employees are concerned over the state of their jobs, state officials are looking at ways to make the state more competitive in the biotech sector. In November, Chris Yochim, chairman of the Delaware BioScience Association, told the Delaware News Journal that recent downsizing from companies like DuPont and AstraZeneca has created a pool of readily available talent for entrepreneurial minded startups looking for a state to call home. Mike Bowman, president of the Delaware Technology Park, believes the state should look to foster a robust health sciences industry, which he said is less risky than state leaders pursuing more typical manufacturing jobs.