Moving away from slow-growing markets and pursuing expanding ones, AstraZeneca will trim its U.S. operations and invest in China.
The firm has announced that by early December it will eliminate about 400 positions at its Wilmington, Del., headquarters. About 70 of the cuts will come from existing vacancies.
On the other hand, AstraZeneca will spend $200 million to build a production facility at China Medical City in Taizhou, in eastern China. The new site is AstraZeneca’s largest investment ever in a single manufacturing facility and will produce intravenous and oral solid medicines. Construction is to be completed by the end of 2013.
“Our new manufacturing facility will complement our efforts to meet the medical needs of Chinese patients with medicines that are locally produced,” AstraZeneca China President Mark Mallon said when announcing the plans on Oct. 10.
According to market research firm IMS Health, the Chinese pharmaceutical market is expected to grow about 20% per year, from about $41 billion in 2010 to about $120 billion by 2015. AstraZeneca’s plan is to expand the availability of medicines to people in both urban and rural areas who have had limited access.
China accounted for about 3%, or $1 billion worth, of AstraZeneca’s 2010 sales. There, the company sells its core and new products, as well as branded generics (see page 15). CitiGroup Global Markets analyst Richard Yeh ranks AstraZeneca first among the top 20 drug companies in China, where it has a 3% market share.
AstraZeneca employs more than 5,000 people in China and has had a presence there since 1993. Operations include its Innovation Centre China in Shanghai and a large manufacturing and supply site in Wuxi New District that serves the Asia-Pacific region.
The U.S market is expected to grow just a few percent per year through 2015, IMS Health predicts. According to AstraZeneca, cuts it is making in the U.S. will allow it to compete in a challenging environment that includes pricing pressures and the ongoing growth of generic medicines.