AstraZeneca to lay off 4,600 more, for total of 7,600

Posted: July 27, 2007

AstraZeneca P.L.C. said yesterday that it would lay off an additional 4,600 employees, trimming its payroll 7,600, or 11 percent of its workforce, within three years.

The London-based drugmaker announced in February that it would dismiss about 3,000 employees in operations and manufacturing. The company said it decided additional cuts were needed in European sales and marketing, information services and business support, and drug research and development.

"We still haven't finished exploring further opportunities to reduce our cost base and improve future profitability," chief financial officer Jon Symonds told investors and analysts. "Although just to be clear, future projects are unlikely to be near the scale that we have been talking about here."

AstraZeneca said it would shed 1,800 jobs in European sales and marketing, 1,800 in information services, 700 in research and development, and 3,300 in operations and manufacturing.

The company said it could not specify the number of layoffs in the Wilmington area, where AstraZeneca's U.S. headquarters employs about 5,000 people.

The cuts will cost about $1.6 billion, but the restructuring effort is expected to save the company $900 million a year by 2010.

AstraZeneca also announced that second-quarter profit declined 10 percent. Net income fell to $1.44 billion, or 95 cents a share, from $1.6 billion, or $1.01 a share, a year earlier.

Chief executive officer David Brennan said in a conference call that the "solid underlying financial performance" will enable AstraZeneca to meet full-year earnings and sales goals. He revised the earnings-per-share range to $3.90 to $4.05 from $3.80 to $4.05 previously.

The latest quarter was negatively affected by 6 cents a share related to the acquisition of MedImmune Inc. in June. MedImmune reported a $103 million operating loss in the quarter. AstraZeneca said it incurred $376 million in restructuring charges for the three months ended June 30.

Revenue rose to $7.3 billion from $6.6 billion after sales of five key products, including cholesterol treatment Crestor and asthma drug Symbicort, increased 12 percent. U.S. sales of the company's best-selling product, heartburn drug Nexium, fell 1 percent, affected by competition from generic omeprazole heartburn treatment.

U.S. sales of Crestor were $353 million, up 30 percent, but Crestor's U.S. market share was 8.6 percent in June, the same as in December 2006. "Although somewhat disappointing," AstraZeneca said, given an increase in share by generic Zocor, Crestor's market position is "resilient."

Shares closed down $2.70, or 4.9 percent, at $52.30 on the New York Stock Exchange.


Contact staff writer Linda Loyd

at 215-854-2831 or lloyd@phillynews.com.

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