AstraZeneca Continues to Invest in Facilities While Planning Layoffs

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Researched by Industrial Info Resources (Sugar Land, Texas). AstraZeneca (NYSE:AZN) (Wilmington, Delaware) is joining other major Big Pharma players, including Pfizer and Merck, with mass company layoffs. Representing about 5% of 65,000 employees worldwide, total layoffs are expected to reach the 3,000 mark over the next three years.

Factors contributing to the layoffs include AstraZeneca’s plan to improve overall production efficiency and the pending patent status currently under review for the hypertension drug Toprol-XL. The patent, scheduled to expire September 2007, was originally granted to AstraZeneca in 2001 and faced preliminary rulings against the patent in early 2006. This sparked other generic pharmaceutical companies to engage in the competition, thus prompting the production of a similar version of the drug at a less prohibitive cost.

Due to the confidential and inflammatory nature of this issue, AstraZeneca has not been proactive in returning phone calls. They stand firm that the patent remains valid, pending the final decision scheduled in an upcoming hearing later this month. Strategically, AstraZeneca seems to be practicing the theory, if you can’t beat them join them, by forming a recent agreement with a supplier of the generic form of Toprol-XL. The anticipation of further agreements may become more prevalent as other patented drugs potentially run the risk of expiring.

Targeted sites for the massive layoffs have not yet been determined but may include two Delaware locations that have a total employee count of 2,000 plus. The Wilmington, Delaware research and development location has been in operation since 2003 with over $275 million spent on investments for initial plant construction and expansion projects. The production site in Newark, Delaware, which also packages several types of pharmaceuticals, including the patented Toprol-XL, may also be affected.

AstraZeneca has invested hundreds of millions of dollars for facility development in recent years and company growth is expected to remain strong. Despite the recent discontinuation of certain drug developments over the past year, a $10 million research lab expansion moves forward in Ville-Saint-Laurent, Quebec and is scheduled to be complete in May of this year. Also in the effort to expand research and development operations is a $100 million expansion project gearing up for construction in Waltham, Massachusetts.

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