AstraZeneca Cuts Worldwide Workforce 10% While Investing in China

The Anglo-Swedish pharmaceutical company AstraZeneca (AZN) will cut its workforce by 10% in an attempt to cut costs. The company will eliminate 7,600 jobs, an increase from the 3,000 job cuts it announced in February. According to AstraZeneca, the reductions will save the company $900 million per year by 2010.

CEO David Brennan said the job cuts would most directly affect the company’s European sales and marketing staff. After that, the largest staff reductions would be in research and development – “and other areas” – in Britain, Sweden, Germany, France, the United States, and Canada. AstraZeneca will record a $1.6 billion charge in connection with the firings.

While AstraZeneca is cutting back on its expenditures elsewhere in the world, it is spending money to expand its presence in China and build revenues from the country. Also, it seems to be transferring some of its business to China in an attempt to keep a lid on costs.

Last year, AstraZeneca announced that it would spend $100 million over three years in China to build the AstraZeneca Innovation Center China. The R&D facility, to be based in Shanghai's Zhangjiang Hi-Tech Park, will focus on translational science, developing knowledge about Chinese patients, biomarkers and genetics. The goal is to discover innovative drugs that treat cancer patients in China.

Also, AstraZeneca has a $14 million pact with WuXi Pharmatech (see story), in which WuXi is performing compound collection synthesis for AstraZeneca. The big pharma also entered a collaboration with Shanghai Jiao Tong University that will seek to understand the genetics of schizophrenia.

AstraZeneca was an early entrant into China, establishing operations there in 1993. AstraZeneca China is headquartered in Shanghai, with branch offices in 20 other cities, and a production plant in Wuxi, Jiang Su Province, built in 2001. That facility manufactures about 80% of all the products the company sells in China. All told, AstraZeneca China has 2900 employees involved in the manufacturing, sales, marketing and clinical research of new products.

As we reported earlier (see story), AstraZeneca China will inaugurate a center in China to source APIs (active pharmaceutical ingredients) there, with the goal of placing orders for $100 million of API by 2010. Eventually, it expects 90% of its API to come from China.

The API initiative is a vote of confidence in the strengthened Intellectual Property rights now available in China and the high quality of manufacturing there – as well as the lower prices. At the same time as it began its API sourcing in China, AstraZeneca China changed its slogan from “In China for China,” to “In China for Global.”

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Disclosure: none.