Alexion Wants a Fresh Start, Slashes 20% of Jobs and Will Move HQ to Boston
Published: Sep 13, 2017
September 12, 2017
By Mark Terry, BioSpace.com Breaking News Staff
New Haven, Conn. – Alexion Pharmaceuticals announced plans to cut costs by closing several sites, moving its headquarters and laying off 20 percent of staff. The job cuts follow 210 layoffs in March 2017.
The structural changes are expected to save the company almost $270 million in GAAP and about $250 million in non-GAAP pre-tax savings yearly by 2019. The company says the savings will let it prioritize investments and optimize capabilities.
Perhaps the most dramatic change is moving its headquarters from New Haven, Conn. to Boston by mid-2018. Alexion will move about 400 positions to Boston. New Haven will, however, be the company’s Center of Excellence for its complement research and process development teams. About 450 staffers will be based in New Haven.
The company, which was founded in New Haven’s Science Park in 1992, moved to its 100 College Street, New Haven location in March 2016. The company is eligible for up to $51 million in incentives from the state of Connecticut, which may be in jeopardy. The company already received a $20 million forgivable loan and is eligible for $25 million in tax breaks and another $6 million if it built a new laboratory facility. One unidentified source told the New Haven Register, “They will have to pay back both the loan and the grant, with interest.”
“Alexion’s 25-year history began in New Haven, and Connecticut remains a critical part of our future,” said Ludwig Hantson, Alexion’s chief executive officer, in a statement. “We value our relationship with the state of Connecticut, and our New Haven-based research team is critical to growing and strengthening Alexion’s leadership in complement, which will allow us to fulfill our mission of serving patients and families with rare and ultra-rare diseases.”
Alexion also plans to consolidate several of its manufacturing sites. It expects to close several sites, including its Rhode Island manufacturing facility and some regional and country-based offices. It indicates it “is aligning its manufacturing facilities with its ongoing multi-product network manufacturing strategy, which utilizes Alexion’s manufacturing operations in the U.S. and Ireland, and manufacturing capacity through its manufacturing partners.”
An unidentified senior official, part of the New Haven Mayor’s office, told the New Haven Register, “As they acquire new companies, the research groups will be in New Haven. (Alexion’s) corporate and C-suite people apparently need a better airport and conference hotels to grow (the) global business side of the business. Alexion’s building is still very state of the art—once reconfigured, we will fill the rest of it with new companies.”
Alexion has had a tough year. Hantson took over the reins of the company in March after a series of scandals shook the company. He took over from David Brennan, who was named interim chief executive officer after chief executive officer David Hallal and chief financial officer Vikas Sinha stepped down in December, the results of various investigations by the U.S. Securities and Exchange Commission (SEC) related to grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in several countries.
The company’s offices in Sao Paulo, Brazil were raided on May 8 as part of an investigation into company business practices in the country. There were claims that Alexion sales reps were given instructions to encourage doctors to send lab tests on patients who were thought to have rare diseases to “preferred partner” laboratories, which had agreements with Alexion to turn over the test results to the company. The SEC’s investigations into grant-making weren’t limited to Brazil, but included Colombia, Japan, Russia and Turkey.
Hantson, in a statement, said, “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. 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. We thank our employees for their contributions to the achievements of Alexion.”