AZ and BMS job cuts add to big pharma woes

AstraZeneca has announced plans to cut 7,600 jobs - some 10 per cent of its global workforce.

This includes the 3,000 job cuts already announced back in February.

Around 700 research and development (R&D) jobs will be culled with the restructure in this department expected to cost around $100m (€73m) over the next two years.

Although BMS didn't expand on its own restructuring plans too heavily, James Cornelius, the CEO of the pharma giant did admit that it would "include workforce reductions in some areas and the rationalization of some facilities."

He said that the company would go into more details later in the year (probably at the December 5th investor meeting) before adding: "We believe that our specialty pharmaceuticals focus, our growing investment in biologics and commitment to reducing our cost base will drive sales and earnings growth in the years ahead, and the strength of our business will help support the dividend."

Both companies are not alone in changing the face of their business to continue to compete in a fast-changing industry.

As challenges within the industry continue to pressurise company's purse-strings, including soaring drug development costs increasing generic competition, Pfizer, Merck & Co., Roche, Bayer and Abbott have all announced their own restructuring programmes.

However, not all of those are cutting R&D expenditure as well.

In a conference call, Cornelius said: "The challenge is to reduce costs while at the same time continue in investing in growth areas.

"With a promising R&D pipeline, we plan to invest further in R&D and the business including specialty medicines and biologics where we see tremendous growth potential."

He also said that he didn't expect the reductions to influence BMS' ability to recruit and retain talent.

Andrew Bonfield, chief financial officer at BMS, said he expected R&D spend to increase in the mid single digit range this year.

Meanwhile, AstraZeneca will spend a total of $1.6bn over the next couple of years in connection with the job cuts and restructure.

However, AZ believes it will save them over $900m per annum by 2010.

AZ is also working to improve its productivity and strategic sourcing - an infrastructure programme expected to lead to 1,800 job losses.

A further 1,800 job losses are expected in sales and marketing departments and the final 3,300 jobs that AZ plan to cull are from the global supply chain.

Further cost cutting exercises are also under review, according to AZ.

Pipeline update As part of its second quarter results, AZ also provided an update on its pipeline.

Big pharma is notoriously reticent when disclosing early stage clinical trials but AZ said ten new molecules have had their first dosing in man since the start of February, bringing the year to date total to 14, a record number for AstraZeneca.

The acquisition of MedImmune earlier in the year has added 14 products in clinical development and a further 28 projects to AZ's pipeline.

The majority of these are monoclonal antibodies and vaccines.

Since February, 16 projects have been discontinued by the pharma giant, not including a further five anticancer projects acquired from MedImmune but since scrapped.

Those compounds scrapped from AZ's pipeline include four cardiovascular and gastrointestinal New Chemical Entities (NCEs) (AZD2479, AZD9684, AGI-1067, and AZD6610), two NCEs to treat neuropathic pain (AZD9272 and AZD6538), three anticancer drugs (AZD5896, AZD3646 and AZD1689) and five NCEs in the area of respiratory diseases and inflammation (AZD7928, AZD6703, AZD1678, AZD2392 and AZD9215).