Strategy

Alexion to Cut 20% of Workforce, Move HQ

The drugmaker is restructuring as it tries to rebuild its drug pipeline amid investigations of its sales practices.
Matthew HellerSeptember 12, 2017

Drug maker Alexion said Tuesday it will reduce its global workforce by 20% and move its headquarters as it seeks to rebuild a drug pipeline that is heavily dependent on the blood disorder treatment Soliris.

The moves continue Alexion’s “strategic assessment” of its organization amid pressure to cut costs and federal investigations of its sales practices. Longtime CEO David Hallal left the company in January and CFO Paul Clancy is the third executive to hold that position since December.

The layoffs announced Tuesday follow a 7% workforce reduction announced in March. Alexion had about 3,100 employees worldwide as of the end of last year.

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“By streamlining our operations we will create a leaner organization with greater financial flexibility that is highly focused on delivering for patients, growing our rare disease business, and both leveraging our leadership in complement and pursuing disciplined business development to expand the pipeline,” CEO Ludwig Hantson said in a news release.

“These types of changes are difficult and we recognize that they have a personal impact on people who have been dedicated to the mission of Alexion,” he added.

Alexion’s 14-story, $100 million glass tower headquarters in New Haven, Conn., had only opened in February 2016. The decision to relocate to Boston stunned Connecticut officials, with U.S. Rep. Rosa DeLauro calling it “shocking and shameful.”

As Endpoints News reports, Alexion “faces a serious challenge, relying for the bulk of its revenue on Soliris, one of the world’s most expensive therapies, with a weak pipeline to back it up in offering new drugs when its patents start to expire.”

The restructuring is designed to free up $250 million in annual spending, $100 million of which will be steered to new business development deals. “The savings will allow Alexion to prioritize investments to advance growth opportunities, optimize capabilities across the organization, and position Alexion to deliver on its financial ambitions,” the company said.

Soliris has a U.S. list price of about $480,000 per year but faces looming competition. In a call with analysts on Tuesday, Clancy said rebuilding Alexion’s pipeline was a “critical need.”