AstraZeneca ups yields but takes $400m hit on plant closures

“We can produce the volume we need with more limited manufacturing capacity,” says AstraZeneca in the wake of closing two biologics facilities in Colorado.

Last month, AstraZeneca announced plans to consolidate its US biologics manufacturing operations. This included closing facilities in Boulder and Longmont, Colorado less than four years after acquiring them from Amgen, and moving operations to its site in Frederick, Maryland.

The restructure aims to drive efficiencies in its operations network, but the Anglo-Swedish firm said it expects to incur a cost of $400 million (€355 million) in one-time restructuring charges associated with the closures.

AstraZeneca is consolidating its US biomanufacturing at its Frederick, MD site. The firm is also dropping the MedImmune brand. Image: GoogleStreetview

“We are taking this measure because we want to sustain operating leverage and we want to work on every possible line of our P&Ls [profit and loss statement],” AstraZeneca CFO Marc Dunoyer said during its Q4 2018 conference call. “We have taken this measure to reduce our capacity in biologicals.”

CEO Pascal Soriot added improvement in drug substance production and higher yields helped drive the decision to reduce AstraZeneca’s network, congratulating his operations team for the developments.

“We always look at our R&D efforts in our commercial success but our operations team is doing a fantastic job and we’ve been able to improve the yield to manufacture our biologics… and also improve the productivity of our Frederick plant to the extent that essentially, we can produce the volume we need with more limited manufacturing capacity. That enabled us to reduce the footprint.”

For the full year, AstraZeneca reported total revenues of $22 billion, $360 million short of 2017’s sales.

Bye bye MedImmune

In other restructuring news, the firm has decided to drop its MedImmune name, incorporating the division under the AstraZeneca brand.

MedImmune has been around for over 30 years and was acquired by AstraZeneca in 2007 for $15.6 billion to supplement its small molecule portfolio with biologic drugs.

“We believe our MedImmune team has done a fantastic job and there’s no reason for them to stop doing this really,” said Soriot on the call.

“There is a level of excitement especially in the oncology team to come together as one oncology team across the board. And outside of oncology and biopharma working together on a global basis is also bringing additional value and excitement.”