AstraZeneca cuts 132 jobs, shuts Montreal facility
Montreal's pharmaceutical research cluster is under further threat as global giants adjust to the loss of patent protection for blockbuster drugs and challenges in developing replacements.
British drug maker AstraZeneca announced Thursday plans to cut costs by closing its Quebec research and development facility, eliminating 132 jobs.
It's just the latest to make such a move. French pharmaceutical company Sanofi-Aventis laid off 100 workers last month at its R&D centre in Laval. Johnson & Johnson also announced the closure of its research centre and the layoff of 126 workers.
The shutdown announcement comes some 18 months after Merck & Co. cut 200 jobs by closing its Montreal lab, which was once the largest research facility in Canada.
"Unfortunately, Montreal is caught up in these global shifts in the pharmaceutical industry," said Robert David, associate professor of strategy at McGill University's Desautels Faculty of Management.
He said Montreal is being caught in a storm because pharmaceutical multinationals that bulked up through acquisitions decades ago now have to prepare for the loss of billions of dollars in revenue as drugs lose patent protection.
Pfizer faced that problem with Lipitor last year. AstraZeneca's revenues have continued to decline. It faces a big hit beginning later this year with the gradual loss of protection of Crestor, Seroquel and Nexium.
Each of the three blockbuster drugs has netted around US$5-billion in annual global revenues.
AstraZeneca's Montreal closure will cut nearly 17 per cent of its Canadian workforce of 800 and leave a few marketing and sales people in the St. Laurent borough of Montreal.
The facility is one of the company's main neuroscience sites focused on the discovery and development of new medicines to treat neuropathic pain.
"Sadly we have to wonder whether Montreal will on an ongoing basis have a very strong pharmaceutical research cluster," said David.
London-based AstraZeneca is reducing its global workforce by 7,300, including 1,800 at 14 research and development sites around the world.
It will also stop R&D activities at its sites in Sodertalje, Sweden, where there is a focus on neuroscience research.
The company is creating a new virtual Neuroscience Innovative Medicines organization in Boston and Cambridge, U.K.
Communications director Jennifer Robinson said the R&D changes are designed to reduce costs and improve productivity.
"The thinking is what we will do going forward is to manage this portfolio of projects with external partners," she said in an interview.
In addition to lost revenues from patented drugs, companies face challenges in finding new medicines to treat complex ailments such as cancer, Alzheimer's and Parkinson's.
"Our ability to find new medicines has not been as great as we would have hoped, so the number of new medicines coming onto the market is in decline and has been for years."
Regulators are also raising the hurdles to approve drugs in light of failures such as Vioxx while insurers and government are reducing how much they pay for drugs.
Quebec Premier Jean Charest said his economic development minister has been given a mandate to develop a plan to address the shift from internal research to pharma partnerships with academia and small companies.
"What I plan to do is adjust and work with the pharmaceutical sector to adjust the intervention and presence of the Quebec government in this sector of research," he told reporters in Ottawa.
David said the shift to personalized medicine based on genetics will require governments to target investments to university medical labs and small startup biotech firms with 10 to 20 workers.
"The problem with that is that doesn't happen in the short-term," the academic said.
"That's something that really takes a decade to foster and in the meantime I think it's going to be really rough but now's the time to start."
Montreal InVivo general manager Michelle Savoie said the latest closure announcement is disappointing, but the life sciences and health technologies cluster has been undergoing deep changes for about three years.
"The large pharma companies are not leaving Montreal. There are some activities that are leaving but the sector will survive," she said.
The non-profit represents some 620 organizations, including 150 research organizations, and 80 subsidiaries of foreign companies. In 2010, it employed 41,000 people in the greater Montreal area, including 31,000 in the private sector.
While layoffs have resulted in a brain drain, many skilled employees have joined small local firms, where they increasingly need both scientific skills and the ability to manage the research process.
Savoie said the federal government needs to ensure the regulatory environment is competitive by adopting intellectual property measure to protect companies internationally.