AstraZeneca Makes Major Changes

Astra Zeneca (NYSE:AZN) today made public its specific restructuring initiatives aimed at improving productivity and strengthening its commercial, operations and R&D capabilities. The sweeping changes are expected to affect about 7,300 positions and will cost $2.1 billion. The company expects payback of an annual $1.6 billion from 2014 onwards.

In the Selling, General and Administrative category, the company intends to reduce sales and marketing regions and cluster together smaller countries. Additionally, customers would be serviced through innovative new channels such as digital technology and call centers. These moves will affect 3,750 jobs.

The R&D category will be restructured to reduce excess capacity while accentuating focus on the neuroscience therapy area. Diminishing returns on investment here are forcing the company to create a “virtual” neuroscience Innovative Medicines unit, which will comprise a core team of company scientists collaborating globally with various, innovative partners. This will reduce personnel numbers significantly and also means closure of R&D operations at two sites, in Sweden and Canada respectively. The changes will impact 2,200 jobs.

Restructuring of operations will build on measures already taken to improve the efficiency of its supply chain and outsourcing of some manufacturing, specifically APIs. These measures will hit about 1,350 positions.

AstraZeneca CEO David Brennan said, “AstraZeneca remains fully committed to our long-term, focused, innovation-driven bio-pharmaceutical strategy. Since 2007, when we announced our first major restructuring program, we have taken decisive steps to improve returns on investment, recognizing 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 health-care environment.” “We are acutely aware that these decisions will affect many employees and we will strive to support our people as we implement these changes.”

Here’s how shares are reacting to the news:

AstraZeneca PLC (NYSE:AZN): AZN shares recently traded at $48.58, up $1.4, or 2.97%.

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