) announced its intention to build a new facility for
manufacturing its blockbuster prostate cancer product, Zoladex
and plans to invest £120 million ($190 million) for the same.
AstraZeneca will build the new facility at its manufacturing site
in Macclesfield, UK. The construction work for the site is
scheduled to begin in 2013 and is expected to be completed by
2016. Products from the new site will be available from 2017.
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The construction of the manufacturing unit will lead to the
creation of 200 temporary jobs and secure 300 existing Zoladex
jobs. We note that the Macclesfield site has been used to
manufacture Zoladex for quite some time. The addition of a new
facility should enable AstraZeneca to meet the demand for this
impressive oncology drug.
We remind investors that the company initiated a major overhaul
of its research and development (R&D) segment in the first
quarter of 2013. As per the proposed plans, the company's R&D
activities will be primarily centered in three facilities
including the UK (Cambridge), the U.S. (Gaithersburg) and Sweden
The SG&A segment will also be optimized. The initiative will
result in the relocation and termination of approximately 2,500
and 5,050 roles, respectively. The company has now initiated the
fourth phase of the restructuring program, which integrates the
earlier programs along with the new one. The initiative is
expected to cost approximately $2.3 billion out of which $1.3
billion ($1.0 billion incurred by end of third quarter) will be
incurred in 2013.
The restructuring initiative is expected to generate savings of
$800 million per annum by the end of 2016 with 50% of this amount
expected to be realized by the end of 2014. This should also
drive the bottom line. Streamlining of operations along with
increased focus on R&D will benefit the company in the long
AstraZeneca carries a Zacks Rank #3 (Hold). Generic competition
has adversely impacted AstraZeneca's revenues over the past few
quarters. This has put significant pressure on the company.
AstraZeneca is looking toward cost-cutting initiatives to drive
the bottom line in the face of genericization.
Right now, companies with an attractive Zacks Rank are
AMAG Pharmaceuticals, Inc.
Osiris Therapeutics, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).