Alexion to Cut Workforce by 20%, Move Headquarters to Boston -- 2nd Update
September 12 2017 - 12:35PM
Dow Jones News
By Austen Hufford, Jonathan D. Rockoff and Joseph De Avila
Alexion Pharmaceuticals Inc. is cutting its workforce by 20%,
moving its headquarters to Boston and closing offices and
manufacturing sites as it works to cut its overhead and move on
from a sales-practices controversy.
The rare-disease drugmaker has seen a slew of management changes
over the past year, including hiring a new chief executive, after
an internal investigation showed senior management pressured staff
to get customers to order its flagship drug earlier than needed to
meet financial targets.
The reorganization is the first major move by new Chief
Executive Ludwig Hantson.
The New Haven, Conn., company said Tuesday it will incur between
$340 million and $440 million of restructuring-related charges.
However, the company added the moves are expected to create $250
million in annual cost savings by 2019.
Alexion pledged to spend $100 million of the annual savings on
researching new drugs and business development. On a call with
analysts, Mr. Hantson said while Alexion will remain in the
orphan-disease treatment space, it will focus more on "rare"
diseases than "ultra rare" ones.
"These changes were necessary to enable the company to deliver
sustainable long-term performance to support our ability to
continue to develop and deliver life-changing therapies for
patients," Mr. Hantson said in a statement.
Shares of Alexion fell 0.6% to $142.03 in Tuesday trading.
The downsizing will eliminate about 600 jobs. At the end of last
year, the company had 3,121 employees across seven locations around
the world.
Alexion plans to close one of its main manufacturing facilities,
located in Rhode Island, for rare blood-disease treatment Soliris,
which generated nearly 90% of annual revenue last year. The company
is in the process of expanding two manufacturing sites in
Ireland.
Alexion joins General Electric Co. and Aetna Inc. as the latest
companies to announce plans to move their headquarters out of
Connecticut in recent years. Other companies have also moved their
headquarters into America's largest cities in a bid to attract and
keep talent. The state of Connecticut is also facing its own fiscal
challenges including the potential bankruptcy of its capital,
Hartford.
The drug company has signed a lease at 121 Seaport, a building
that is under construction but which is expected to be ready in
June, an Alexion spokeswoman said. Alexion said it would have 400
positions in Boston.
About 450 positions will remain in New Haven and those employees
will work in roles including research, clinical supply and quality
and nurse case management, the company said.
Catherine Smith, commissioner of Connecticut's Department of
Economic and Community Development, called Alexion's decision
"disappointing." "Setbacks like this, though unfortunate, do not
deter the department from pursuing smart policies and ventures with
growing companies in our state," she said.
Alexion, founded in 1992 in a science park in New Haven, now
operates in about 50 countries. The state of Connecticut provided
Alexion with a forgivable $20 million loan and $6 million grant in
2012 when the company said it would move its then headquarters from
Cheshire, Conn., back to New Haven and add 200 to 300 full-time
jobs to that site.
Since 2012, the company has grown to about 840 employees,
exceeding the 200 to 300 figure required to meet its obligations
for the $20 million forgivable loan, an Alexion spokeswoman
said.
"We are in discussions with the state of Connecticut, and we
will meet our obligation to the state of Connecticut," the
spokeswoman said.
Financial incentives also weren't enough to keep Aetna in the
state. Gov. Dannel Malloy previously said it would match any
package from other states. Aetna ultimately chose New York City
where the city and state promised it $24 million in
performance-based tax credits and $9.6 million in other tax
benefits.
An Alexion spokeswoman said it wasn't awarded incentives from
the state of Massachusetts as part of its planned move, but the
company may qualify for incentives at a later date.
Write to Austen Hufford at austen.hufford@wsj.com, Jonathan D.
Rockoff at Jonathan.Rockoff@wsj.com and Joseph De Avila at
joseph.deavila@wsj.com
(END) Dow Jones Newswires
September 12, 2017 13:20 ET (17:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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