AstraZeneca to cut a further 7,300 jobs

Professor David Phillips: "The easy targets for new drugs in the body have essentially been used up"

Anglo-Swedish drugs maker AstraZeneca has announced a further 7,300 job cuts over the next two years as part of a new restructuring programme.

The GMB Union has said 250 to 300 of the cuts will be in R&D at the firm's site at Alderley Park, Cheshire.

It also said there would be unspecified back office cuts at other UK sites.

AstraZeneca announced a fall in pre-tax profits for the three months to the end of December to $2.05bn (£1.32bn) compared with $2.28bn in 2010.

Profit for the financial year was up to $12.37bn, from $10.97bn the year before.

The UK's second-largest drugs firm has 61,000 staff globally, of which 8,000 are in the UK.

The GMB union said shedding R&D jobs would damage the UK economy.

"These cutting edge R&D [research and development] jobs are both well paid and essential for a thriving UK economy," said Allan Black from the GMB.

'Cutting edge' jobs

The latest cuts are part of the third restructuring programme the company has carried out since 2007, and is designed to save $1.6bn a year by 2014.

Analysis

There are still large profits being made by pharma, but there are pressures on the whole industry.

Huge costs in developing new drugs are paid for with huge profits while the company has exclusive rights to manufacture the medication. However, when patents expire, anyone can manufacture the drug and profits plummet.

Many money-spinners are reaching the end of their lifespans and there are concerns that not enough new drugs are coming in to replace them.

One of the problems with drug research is that the obvious drugs have already been made.

The aim is to release funding to invest in research and development and "the UK remains strongly positioned to compete for those R&D dollars," Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry told BBC News.

He said the job losses at AstraZeneca were a result of changes to the the R&D process that had become "more complex and much more expensive".

"Increasingly there has been externalisation of R&D, collaboration with universities, with research charities, with academia... So that means that you don't necessarily employ people [directly]."

In its first round of restructuring AstraZeneca cut 12,600 positions between 2007 and 2009.

It began a second programme in 2010, which the firm said would lead to the loss of 9,000 jobs by 2012.

It has sites around the UK at Alderley Park, in Cheshire, Avonmouth near Bristol, Brixham in Devon, and London, and employs staff through affiliated companies in Liverpool, Cambridge and Luton. The Alderley Park site is the company's largest, employing about 3,000 people.

Losing patents

AstraZeneca blamed increased competition for the fall in fourth quarter profits.

"Disciplined execution of our strategy has delivered a good performance in 2011, in the face of intensified pricing pressure and generic competition," said chief executive David Brennan.

"While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, R&D based strategy and today have announced further steps to drive productivity in all areas," he added.

The company is also facing the loss of patents on some of its products such as anti-psychotic treatment Seroquel, and has not yet released alternative money earners.

"That's really why AstraZeneca are in the position there are now, they don't see anything coming through soon enough to have an impact," said David Phillips from the Royal Society of Chemistry.

"It's a fact that the easy targets, in the body, for the production of drugs have, essentially, all been used up," he added.

AstraZeneca's attempts to develop new drugs have run into trouble.

In December, it scrapped an ovarian cancer drug and took a significant loss on an experimental antidepressant.

Announcing its results, AstraZeneca also said it would begin a $4.5bn share buy-back scheme and increase its dividend by 10%.

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