Biogen Idec has unveiled details of a restructuring which will see some 650 jobs go as part of a plan to achieve annual savings of $300 million.
The job cuts represent around 13% of its workforce, leaving Biogen with 4,275 employees. The biotech major says it is reallocating resources within R&D "to maximise investment in the highest-potential programmes" and will terminate or outlicense its oncology and cardiovascular projects.
Biogen added that it will "substantially reduce its small molecule discovery and process development efforts and exit select neurology and immunology development programmes".These include neublastin for neuropathic pain and in total, the company will exit 11 projects.
With this change of focus comes reorganisation. Biogen will relocate its US workforce from six current locations into three existing state-of-the-art facilities in Weston and Cambridge, Massachusetts, and Research Triangle Park, North Carolina. Facilities in San Diego, plus those in Waltham and Wellesley (both Massachusetts) will be closed.
Additionally, Biogen is getting rid of its oncology and rheumatology sales force for Rituxan (rituximab), with partner Genentech, a unit of Roche, assuming full responsibility for marketing the drug in the USA.
Chief executive George Scangos said the loss of jobs "is something I deeply regret but is an unavoidable outcome of our new focus". He added that the closing of the San Diego site "is especially painful, as it is the home of the original Idec Pharmaceuticals and has played a fundamental role in the success of the company".
Nevertheless, he said Biogen "will be better off as a result of these actions" as "we have been operating in too many therapeutic areas and haven't maximised our opportunities. We will now focus on a few areas where we can be among the best, and this starts with neurology".
This will be done, Biogen hopes, by maximising the potential of its multiple sclerosis blockbusters Avonex (interferon beta-1a) and Tysabri (natalizumab) and bringing forward its promising MS pipeline, including fampridine, BG-12, PEGylated interferon, daclizumab and anti-LINGO. The company added that it will "aggressively pursue emerging opportunities in personalised medicine for MS patients" and also focus on areas such as amyotrophic lateral sclerosis and Parkinson's disease "where there is a tremendous need for new treatments".
Mr Scangos added that he wants Biogen to become "a leading partner in biotechnology", claiming that "we are the optimal size and scale to understand the needs of our partners while exploiting our significant strengths in biologics". He went on to say that the restructuring, which will make the firm "leaner, more nimble and more decisive", will also save more than $300 million annually. Implementing the changes will result in $115 million of restructuring costs, comprised of $85 million for the workforce reduction and $30 million to close and consolidate facilities. Some $70 million of the costs will be incurred in the fourth quarter of 2010.
The news has gone down well with analysts and Geoffrey Meacham at JP Morgan issued a research note saying that while the initiative "was widely anticipated..it should be a positive for Biogen over the longer term as it eliminates some higher risk and lower synergy pipeline candidates".