Speculation that AstraZeneca was to drastically cut its workforce was realised today when the Anglo-Swedish drugmaker announced some 7,300 jobs would be axed.

Initial rumours earlier in the week had put the figure at 3,000 job losses, but today’s news, released as part of the company’s fourth quarter and 2011 full year results, is more than double that and is equivalent to 12% of the workforce. AstraZeneca, Britain’s second-biggest drugmaker, has already removed 21,600 roles since 2007.

The announcement forms part of new restructuring initiatives “designed to improve productivity and strengthen the company’s commercial, operations and research and development capabilities”, which will be implemented in a bid to counter intense generic competition as top-sellers ulcer treatment Nexium, antipsychotic Seroquel, and lipid lower Crestor go off patent over the next four years.

While the cost of the restructuring is estimated to be $2.1 billion, the company hopes it will deliver an estimated $1.6 billion in annual benefits by the end of 2014. 

“AstraZeneca remains fully committed to our long-term, focused, innovation-driven biopharmaceutical strategy,” chief executive David Brennan said in a statement. “Since 2007, when we announced our first major restructuring programme, we have taken decisive steps to improve returns on investment, recognising that this demands concerted, enterprise-wide action. Today’s initiatives should be seen in this strategic context as we continue to reshape our business to improve productivity and innovation and with it our long term ability to compete in a rapidly changing healthcare environment.”

According to AstraZeneca’s statement, approximately 3,750 positions will be affected within the company’s Selling, General and Administrative category, 1,350 within the company’s operations function, while approximately 2,200 positions globally will be impacted by the restructuring of the company’s R&D functions.

As part of the R&D restructuring, AstraZeneca will create a new “virtual” neuroscience Innovative Medicines unit (iMed) made up of a small team of around 40-50 AstraZeneca scientists conducting discovery and development externally, through a global network of partners in academia and industry. The team will be based in Boston (USA) and Cambridge (UK).  As a result of this move, R&D activity at two sites focused on neuroscience, Sodertalje in Sweden and Montreal in Canada, will cease with the Montreal facility closing entirely.   

The future of AstraZeneca’s other R&D sites has not been disclosed.

News about the job cuts has perhaps overshadowed the dismal full year results for the drugmaker, including a 2% fall in revenues to $33.3 billion and a 4% drop in profits to $13.2 billion - $3 billion was lost from its revenues just from patent expiries and government intervention in drug prices.

2012 also looks bleak for the company with an anticipated 10% plus drop in revenues and lower profits – much coming off the back of late stage pipeline failures, such as ovarian cancer drug olaparib, and regulatory obstacles, such as the US Food and Drug Administration’s request for additional data on the diabetes drug dapagliflozin.

Moving forward, the company expects its new drugs will only contribute $2-4 billion by 2014, down from a previous estimate of $3-5 billion.  Some analysts are now speculating the company will need to make a large acquisition to stay afloat.

However, on a brighter note, AstraZeneca is extending its share buy-back programme with plans to return as additional $4.5 billion to shareholders in 2012 andthe company also announced a 10% jump in its dividend.