Friday, June 13, 2008

AstraZeneca announces outsourcing in two departments

Source: Click

AstraZeneca PLC inked two outsourcing contracts this week, including one with a Swedish information technology company that will take on duties at the company's U.S. headquarters in Fairfax.
The other contract continues a collaboration with a Chinese company to produce thousands of compounds for testing as potential drug candidates.

The IT company Sigma AB will manage data from the drugmaker's clinical trials. AstraZeneca spokeswoman Laura Woodin said she didn't know what effect the contract would have on the local staff, but the company's information services department would be trimmed as part of an effort to cut 1,800 such jobs across the company.

"I think it's fair to say locally within our IS department, there are job eliminations as part of this overall effort to enhance productivity," Woodin said.

Information technology was just one area AstraZeneca targeted for cuts in a restructuring plan announced in July. In all, the company said it was planning to cut 7,600 jobs globally over a three-year period. The plan, expected to cost $1.6 billion, called for cutting 3,300 positions in the company's global supply chain, 1,800 positions in sales and marketing positions in Europe, and 700 positions in research and development.

AstraZeneca, one of Delaware's largest employers with about 4,500 workers, would not detail any local job cuts.

"We continue to carry out plans announced last year to increase efficiency and reduce positions globally over a three-year period," Woodin said.

As part of the effort to increase efficiency, AstraZeneca has farmed out an increasing amount of its work to outside companies. Last year, the company signed a seven-year, $1.4 billion deal with IBM to run its information technology infrastructure in 60 countries.

In a deal announced earlier this week, Shanghai-based WuXi Pharma-Tech said it signed a three-year agreement with AstraZeneca, following a two-year, $14 million collaboration in which WuXi delivered more than 100,000 chemical compounds to AstraZeneca for testing.

At a recent presentation, Karen Gotting-Smith, an AstraZeneca vice president, said the company has more than 18,000 such collaborative agreements with institutes, universities or other pharmaceutical or biotechnology companies.

In April, AstraZeneca announced an agreement with India-based Ranbaxy Laboratories Ltd. to outsource production of the active pharmaceutical ingredient in its best-seller Nexium, as well as finished doses of the heartburn drug. Chief executive David Brennan said at the time that AstraZeneca planned to outsource the manufacturing of all its active pharmaceutical ingredients in the next five to 10 years.

AstraZeneca is one of a handful of companies that announced plans to outsource manufacturing "on a previously unheard-of scale," according to a recent report from health care information firm IMS Health.

The emphasis on outsourcing stems from a cost-cutting mentality among drugmakers, prompted by slowing sales growth , according to the report.

"This shift in thinking has been brought about by a need to look at every item on the balance sheet -- no matter how small a fraction of overall costs -- to find savings," the report states.