Cost-Cutting Continues as AstraZeneca PLC Unloads U.S. HQ in $50 Million Deal
Published: Jul 13, 2017
July 10, 2017
By Alex Keown, BioSpace.com Breaking News Staff
WILMINGTON, Del. – Pharma giant AstraZeneca has sold its U.S. headquarters in Delaware for $50 million after it sat on the market for nearly a year, the News Journal of Wilmington reported last week.
AstraZeneca put the 30-acre property up for sale in August 2016. The U.K.-based company sold its Delaware facility to local real estate developer Delle Donne Associates. According to The News Journal, AstraZeneca will continue to lease two buildings as part of its long-term plans to remain in the area.
"AstraZeneca remains committed to the state of Delaware," AstraZeneca spokeswoman Alexandra Engel told The News Journal. "Selling the site and leasing back a smaller footprint will allow us to more efficiently use our office space while lowering ongoing operational costs."
Although terms of the new lease AstraZeneca signed were not disclosed, Ernie Delle Donne, president of the real estate company bearing his name, told The News Journal that the deal made him “extremely comfortable.”
AstraZeneca has maintained strong ties to Delaware. At one point the company had approximately 5,000 employees in the state, but over the years that’s been reduced to about 1,500 as the company has cut staff to save money and increase flexibility. In December 2016, about 150 employees in Delaware were handed pink slips. Those employees were part of a 700-employee job cut the company announced across its commercial business unit. Those cuts were part of what the company said was a growth strategy to transform its commercial business.
That growth strategy has included numerous cost-cutting methods as the company looks for new revenue streams to bolster growth and fend off possible takeover attempts. Earlier this year ,the company said revenue will likely decline in 2017 due to generic challenges, particularly as generic drugs eat into the market share of its blockbuster anti-cholesterol drug Crestor.
AstraZeneca has been in the process of selling off several drugs, particularly as some of them face revenue challenges from the loss of patents or rival generic drugs. Earlier this year AstraZeneca laid out how many of its drugs are losing revenue due to competition. For example, AstraZeneca said sales of schizophrenia drug Seroquel XR were down 83 percent in the United States and 37 percent in Europe. COPD drug Symbicort saw a decline of 21 percent in the United States, which AstraZeneca said was in line with predictions for 2017.
AstraZeneca’s CEO Pascal Soriot has been on a quest to achieve $45 billion in annual revenue by 2023. The company has been eying its respiratory and oncology pipelines as potential financial tent-poles. Results from one highly anticipated lung cancer trial, the Mystic trial, are expected within the next few weeks. The Phase III lung cancer trial was initially designed to assess the benefit of durvalumab monotherapy and durvalumab and tremelimumab (durva + treme) combination therapy versus standard-of-care (SoC) chemotherapy, focused on progression-free survival (PFS). However, now the trial will assess PFS and overall survival endpoints in patients with PDL1-expressing tumors for both durvalumab monotherapy and the combination of durva + treme, as well as in ‘all comers’ for the combination of durva + treme, versus SoC chemotherapy, the company said.
If the readouts are significantly positive, analysts have suggested the treatment could be worth an estimated $2.5 billion in annual revenue. If the trial results are not positive, Soriot said earlier this year that could trigger companies to begin looking at acquiring the AstraZeneca, much like Pfizer sought in 2014. Soriot was able to beat that takeover attempt back, which is what prompted his bold financial challenge for 2023.