AstraZeneca Will Lay Off 5K Workers After Poor Sales Of Heart Drug Rivaling Plavix And Other Generics

By Malik Singleton | March 21 2013 4:54 PM

AstraZeneca (NYSE: AZN) will shed a tenth of its workforce by 2016, around 5,050 jobs, CEO Pascal Soriot announced in a meeting with investors Thursday.

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AstraZeneca has agreed to buy U.S. company Ardea Biosciences for $1.26 billion, giving it a new gout drug to bolster its weak pipeline in a deal that feeds a wave of M&A in the biotechnology sector.

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The layoffs, which will begin with 2,300 sales and administration jobs, follow dismal sales of its 2011 heart attack and stroke prevention medicine, Brilinta.

The heart drug competes directly with Plavix, from Bristol-Myers Squibb (NYSE:BMY), but only generated a disappointing $324 million worldwide in 2012. Plavix, in sharp constrast, reached $6 billion in sales in 2012 but it is now generic.

AstraZeneca will have difficulty competing with cheaper generics. Analysts and investors predict that Brilinta will grow modestly in 2018 to $1.3 billion in annual sales, according to Forbes. But AstraZeneca believes Brilinta can become a multibillion-dollar seller.

Paul Hudson, AstraZeneca's executive vice president for North America, said in Thursday's investor presentation that the company will present proof that Brilinta reduced cardiovascular deaths by 21 percent more than Plavix in a clinical trials. That would mean that if eligible patients take Brilinta, at least 100,000 lives would be saved, he said.