AstraZeneca is cutting nearly a quarter of its U.S. sales force in a second wave of redundancies in as many months as it seeks to reduce costs.
Britain's second biggest drugmaker said on Wednesday it would cut about 1,150 sales representative and management jobs at a cost of between $50 million and $100 million, charged in the fourth quarter.
Rich Fante, president of AstraZeneca U.S., said it was a difficult decision to make the reductions, which represent 24 percent of the U.S. sales organization and come on top of 400 job U.S. losses announced in October.
"The changes we are making, however, will help us deliver better results for our business and, most importantly, continue delivering on our mission of patient health," he said.
Since restructuring costs are not included in the company's core earnings measure, the cost of the cuts will not have any impact on its guidance for core earnings per share for 2011.
Generic competition and pricing pressures are already weighing on AstraZeneca's sales in the world's biggest market and things are about to get tougher.
Over the next few years, analysts forecast a steady decline in sales at the London-based group because patents expire on big sellers like Nexium for heartburn and schizophrenia drug Seroquel.
What is more, it faces a major challenge to its biggest-selling medicine Crestor, following the arrival of cheap generic copies of Pfizer's market-leading cholesterol pill Lipitor, which hit the market at the end of November.
AstraZeneca has relatively few new drugs to replace such blockbusters, leaving its sales line exposed and its management under pressure to cut costs wherever possible.
The latest round of job cuts, which are expected to be finalized by early February 2012, are in addition to the wide-ranging program of 8,000 job cuts, designed to be implemented over several years, that AstraZeneca announced in January 2010.
The likes of Pfizer, Merck and Novartis have also announced major job cuts but the scale of the retrenchment has been particularly severe at AstraZeneca.
The impact of the latest U.S. changes will vary by geography and selling teams and a company spokeswoman said AstraZeneca was looking to make greater use of alternative methods for promoting its medicines, such as online tools.
Source : Reuters
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