AstraZeneca’s Nexium drug will lose patent protection by the end of 2014

AstraZeneca has announced 2,150 job cuts with most of them concentrated in Tatton which is Chancellor George Osborne’s constituency, just five months after he helped the drugs group secure a £5m government grant to develop its Alderley Park research and development centre. The UK’s second biggest pharmaceutical company announced that it will be closing down the Alderley Park R&D facility in Tatton, causing 550 jobs losses there and 150 elsewhere in the UK over the next three years. Furthermore, AstraZeneca has even confirmed to make 1,600 jobs redundant from the facility to Cambridge, where the drugs company is relocating its headquarters and creating a new $500m (£330m) R&D centre. The shake-up has also prompted a charge worth $1.4bn (£930m).

The job losses at AstraZeneca bring the total UK redundancies to more than 10% of the company’s existing workforce of 6,700 in Britain spread over eight sites. Around 700 non-R&D jobs will remain at Alderley Park, while another 650 layoffs will occur in the US. It has been just over a year since AstraZeneca had announced 7,300 job cuts under its cost-saving drive. The new jobs cuts by AstraZeneca, which is one of the biggest employers in George Osborne’s constituency, come just two days before the chancellor delivers a budget aiming to avoid a triple-dip recession.

George Osborne will be questioned about the £5m grant the government gave AstraZeneca to develop Alderley Park into a “bioscience cluster” just five months ago. More than 7% of Osborne’s employed constituents, “including some of the world’s most skilled and experienced science professionals”, work at Alderley Park. With the job cuts and headquarters relocation, AstraZeneca has acquired the wrath of workers union Unite. Unite’s national officer Linda McCulloch said, “Staff will be shell-shocked by this announcement. AstraZeneca’s decision to relocate over a thousand jobs to Cambridge is a massive blow for the North-west. The region desperately needs this highly skilled workforce – they make a huge contribution to the economy and to the community.”

Job cuts at AstraZeneca is not the only reason that the drugs manufacturer is in trouble. While its ulcer and heartburn treatment drug Nexium, will lose its patent protection by end of next year, the group’s best-selling drug, Crestor, used to combat cholesterol, set to lose its US patent protection in 2016. These drugs account for 40% of AstraZeneca’s sales. This will result in open competition with AstraZeneca’s low-cost rivals which is likely to cause profit and sales setbacks.