AstraZeneca says it will reduce its US sales force by 1,150 managers and reps as part of its strategy to operate more efficiently in the country.
This equates to about 24% of the company’s sales organisation in the USA and is on top of a streamlining plan announced in October for its commercial business, which will result in the loss of 400 posts. The cuts are also in addition to the major restructuring programme the Anglo-Swedish drugmaker announced in January 2010; that programme will see 8,000 jobs shed by 2014.
Rich Fante, AstraZeneca's president in the USA, said "these are difficult decisions that impact valued employees” but the changes "will help us deliver better results for our business". This latest round of cuts will be finalised by early February 2012.
The company noted that it will take a charge of $50-$100 million in the fourth quarter but restructuring costs are excluded in its financial measures, so do not affect guidance for core earnings per share for 2011.
The latest round of cuts comes as AstraZeneca battles to deal with pricing pressures and the effects of generics. Beyond 2016, the firm faces patent expirations to a couple of blockbusters - the lipid-lowerer Crestor (rosuvastatin) and the antipsychotic Seroquel XR (quetiapine) - and it is already being hit hard by copycat versions of the blood pressure drug Toprol XL/Seloken (metoprolol) and Arimidex (anastrozole) for breast cancer.
AZ to buy Guangdong BeiKang
Meantime, while the US market looks more unattractive, China is blooming and AstraZeneca has entered into an agreement to acquire Guangdong BeiKang Pharmaceutical Co, a privately-owned generics company, based in Conghua City, Guangdong province.
The deal will give it access to a portfolio of injectable anti-infectives and is contingent on getting approvals of certain regulatory authorities, including the Ministry of Commerce in China. Financial terms were not disclosed.
The proposed acquisition comes on the heels of AstraZeneca’s $200 million investment in a new manufacturing facility, located in China Medical City, Taizhou, Jiangsu province. Mark Mallon, head of the firm's Asia-Pacific operations, said it continues to invest in the key emerging markets such as China "where the combination of growing populations, elevated levels of chronic diseases and increasing income are driving demand and expectations for better healthcare".
Since first establishing a presence in 1993, AstraZeneca has invested around $500 million in China and has "fast become one of the leading biopharmaceutical companies in the country". Turnover last year topped $1 billion.