AstraZeneca's axe has made its latest appearance in South Africa, with the sale of a packaging plant and the formation of an outsourcing deal with its new owners.
The drug heavy's South African arm sold its packaging facility in Alrode to a domestic firm called Afrika Biopharma Manufacturing (ABM), for an undisclosed amount. As part of the deal, ABM has also been contracted by AstraZeneca to continue packaging all its products at the facility on a fee-for-service basis until 2011. AstraZeneca has been slowly scaling back activity at the site since 2000, when it decided to phase out its manufacturing function and to outsource its warehousing, distribution, order-generation, debt management and credit control functions. The pharma firm has said in the past that the decision to outsource these activities was taken because they did not form part of its core business, namely the sale and the marketing of its products. In addition, its Alrode distribution facilities were said to be outdated and in need of considerable investment. Meanwhile, the site's sale is just one of the many moves AstraZeneca has been making in a sweeping restructuring attempt, first revealed at the beginning of this year, which aims to improve its productivity and strategic sourcing. In July the firm announced plans to cut 7,600 jobs over the next two years - some 10 per cent of its global workforce - which will comprise of the culling of some 1,800 jobs through changes in infrastructure, along with 700 research and development (R&D) posts, 1,800 job losses in sales and marketing, with the final 3,300 positions being axed from its global supply chain. However, AstraZeneca is not alone in changing the face of its business to continue to compete in the fierce and fast-changing pharmaceutical industry.
As challenges within the industry continue to pressurise company purse-strings, especially soaring drug development costs and increasing generic competition, Pfizer, Merck & Co., Roche, Bayer and Abbott and most recently, GlaxoSmithKline, have all announced their own restructuring programmes with similar job-culling and cost-cutting agendas.