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UPDATED: AstraZeneca to ax 1,600, relocate thousands in global R&D reshuffle

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AstraZeneca CEO Pascal Soriot

Looking to revive a strugging R&D operation, AstraZeneca's new CEO has outlined a massive global research reorganization that will require moving thousands of its scientists and other staffers in the U.S. and Europe into key clusters while laying off 1,600 others. Part of the plan calls for the company to shutter its major research efforts at Alderley Park and invest $500 million in a new R&D complex in Cambridge, U.K., consolidating its small molecule and biologic research in the country under one roof as the company ($AZN) concentrates its efforts in regions where it already has a big presence. And it has equally big plans for the U.S. as it moves its big Global Medicines Development Group from Delaware to Maryland, axing hundreds of jobs along the way.

In its release, AstraZeneca says it will reduce its head count by 1,600, while relocating 2,500 jobs. The restructuring will cost about $1.4 billion. This is AstraZeneca's third R&D restructuring in three years. 

The new strategy will eliminate some 650 jobs in the U.S., with 1,200 jobs being removed from Wilmington, DE--which remains the company's North American headquarters--and 300 jobs moving to Gaithersburg, MD. Those moves are being required in light of "the exit of the Global Medicines Development group (from Wilmington) and the relocation of global marketing and U.S. specialty care commercial roles" to Gaithersburg. Another 170 staffers,or at least their jobs, will be relocated to facilities around the globe.

The reshuffle requires the relocation of 1,600 research roles from Alderley Park in the U.K., most into the new center in Cambridge once it is completed, with an unspecified number bound for other locations in the U.K. and around the world. The pharma giant also says that its Paddington headquarters in London will close by 2016, with staff moving to the Cambridge location. Some 700 jobs will be culled from Alderley and other U.K. sites with another 300 positions being sent abroad. 

Aside from the Cambridge, U.K. center, AstraZeneca's Pascal Soriot has tapped the Washington, DC suburb of Gaithersburg--home to MedImmune--as the company's primary biologics R&D complex. And its facilities in Mölndal, near Gothenburg, Sweden, will be the primary center for small molecule work, continuing a long-term R&D theme at the company. AstraZeneca also singled out its work in Boston as one of several strategic locations that will provide support work to the big three centers. The full reorganization will take three years to roll out.

"It's obviously unsettling," Mene Pangalos, one of the top R&D executives at AstraZeneca, tells FierceBiotech. But it's necessary.

"We've been too big, too spread out and too diffuse; way, way too complicated as an organization," he says. Earlier reorganizations left too many empty buildings and offices, he adds. "We're not going to have 4,000 empty seats across our sites. This is about improving productivity." This new restructuring simplifies things considerably, he adds, leaving three key global research centers where scientists can mingle together.

The new strategy also falls in line with similar efforts at rival pharma companies, which have been looking to organize new initiatives around biotech clusters. Johnson & Johnson ($JNJ), for example, has been setting up four new innovation centers in global hubs, while Pfizer ($PFE), Roche ($RHHBY) and others have eliminated old research centers in an attempt to come up with a more constructive approach to drug development.

"The changes we are proposing represent an exciting and important opportunity to put science at the heart of everything we do because our long-term success depends on improving R&D productivity and achieving scientific leadership," said Soriot. "This is a major investment in the future of this company that will enable us to accelerate innovation by improving collaboration, reducing complexity and speeding up decision making. The strategic centers will also allow us to tap into important bioscience hotspots providing more of our people with easy access to leading-edge academic and industry networks, scientific talent and valuable partnering opportunities."

AstraZeneca is no stranger to restructuring. Back in 2011 then CEO David Brennan announced that the company was eliminating 7,000 jobs in its second stab at a reorganization. Of those cuts, 2,200 were reserved for R&D as the company moved to shutter R&D facilities in Soedertaelje in Sweden and Montreal. Neuroscience, once a key feature in the pipeline, was scaled back, with plans to field a "virtual" team in key hubs. And back in early 2010 AstraZeneca eliminated 3,500 R&D jobs. This latest announcement marks the elimination of at least 8,300 R&D jobs over three years.

Soriot's move comes just days ahead of a planned March 21 investor's day meeting, in which the CEO plans to continue to reveal details of his plan to turn around AstraZeneca, which has been hit with weakened sales after years of largely ineffective R&D work. Shortly after taking the reins at the company, Soriot in January showed R&D chief Martin Mackay the door. 

- here's the release

Special Report: AstraZeneca - Biopharma's Top R&D Spenders - 2012

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