Montreal Pharma Research Cluster Threatened Again As AstraZeneca Closes Lab

From Canadian Press DataFile (February 2, 2012)

By Ross Marowits

MONTREAL -- Montreal’s status as a pharmaceutical research centre is under further threat as global giants adjust to the loss of patent protection for blockbuster drugs and challenges in developing replacements.

British drug maker AstraZeneca announced Thursday plans to cut costs by closing its Quebec research and development facility, eliminating 132 jobs.

It’s just the latest to make such a move. French pharmaceutical company Sanofi-Aventis laid off 100 workers last month at its R&D centre in Laval. Johnson & Johnson also announced the closure of its research centre and the layoff of 126 workers.

The moves come some 18 months after Merck & Co. cut 200 jobs by closing its Montreal lab, which was once the largest research facility in Canada.

"Unfortunately, Montreal is caught up in these global shifts in the pharmaceutical industry," said Robert David, associate professor of strategy at McGill University’s Desautels Faculty of Management.

He said Montreal is being caught in a storm because pharmaceutical multinationals that bulked up through acquisitions decades ago now have to prepare for the loss of billions of dollars in revenue as drugs lose patent protection.

Pfizer faced that problem with Lipidor last year. AstraZeneca’s revenues have continued to decline. It faces a big hit beginning later this year with the gradual loss of protection of Crestor, Seroquel and Nexium.

Each of the three blockbuster drugs has netted around US$5 billion in annual global revenues.

AstraZeneca’s Montreal closure will cut nearly 17 per cent of its Canadian workforce of 800 and leave a few marketing and sales people in the St. Laurent borough of Montreal.

The facility is one of the company’s main neuroscience sites focused on the discovery and development of new medicines to treat neuropathic pain.

London-based AstraZeneca is reducing its global workforce by 7,300, including 1,800 at 14 research and development sites around the world.

"A lot of these changes, at least the ones that impact on research and development are designed to reduce some costs and to improve productivity," said Jennifer Robinson, director of communications based in Montreal.

It will also stop R&D activities at its sites in Sodertalje, Sweden, where there is a focus on neuroscience research.

The company is creating a new virtual Neuroscience Innovative Medicines organization in Boston and Cambridge, U.K.

"The thinking is what we will do going forward is to manage this portfolio of projects with external partners," she said in an interview.

In addition to lost revenues from patented drugs, companies face challenges in finding new medicines to treat complex ailments such as cancer, Alzheimer’s and Parkinson’s.

"Our ability to find new medicines has not been as great as we would have hoped, so the number of new medicines coming onto the market is in decline and has been for years."

Quebec Premier Jean Charest recently said the province will undertake a review on ways to support this vital industry.

"Companies that did a lot of internal research are now moving towards research platforms shared with academia," Charest said in an interview in Davos, Switzerland, at the World Economic Summit.

"It may mean a different way to intervene by further supporting these platforms then instead of laboratories."

David said the shift to personalized medicine based on genetics will require governments to target investments to university medical labs and small startup biotech firms with 10 to 20 workers.

"The problem with that is that doesn’t happen in the short-term," the academic said.

"That’s something that really takes a decade to foster and in the meantime I think it’s going to be really rough but now’s the time to start."

AstraZeneca said Thursday its full-year profit was $10 billion, up from $8.1 billion a year earlier. The profit advance was helped heavily by a $1.5 billion gain from the sale of its dental subsidiary, Astra Tech.

The Anglo-Swedish company said revenue this year will be hit by government interventions on prices, generic competition and the loss of exclusivity for Seroquel IR, a drug for the treatment of depression, and hypertension drug Atacand in global markets.

A more detailed look at the earnings shows that generics cut revenue by US$2 billion in 2011 while price interventions cost another US$1 billion.

Posted: February 2012


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