Biogen on Tuesday said it will eliminate 1,000 jobs as part of a cost-cutting drive that it expects will save $1 billion in annual operating expenses by 2025.
The company plans to invest $300 million of those savings into product launches as well as research and development, which it has spent the first half of this year reorganizing under new CEO Chris Viehbacher.
“There’s been a complete redesign of Biogen,” Viehbacher said on a conference call with analysts. “This is an opportunity to make sure in this year, before we get into [new] product launches, that we are truly fit for growth.”
The job cuts were announced alongside second quarter earnings that beat Wall Street forecasts, but showed an eroding base business. Total revenue shrank by 5% from the same period a year ago, and Biogen anticipates a similarly sized decline on an annual basis.
Viehbacher, who took over as Biogen’s head last November, is attempting to revive the company’s fortunes following repeated clinical trial failures and the disastrous launch of Aduhelm, an Alzheimer’s drug that was controversially approved in the U.S. two years ago.
Aduhelm was supposed to transform the company and bring in billions of dollars of new revenue. But conflicting trial data left doctors reluctant to prescribe it, while Biogen’s decision to price it at $56,000 a year led to intense pushback from insurers.
The company never made much money from the drug, which was the first new Alzheimer’s medicine in two decades, and largely gave up on trying to sell it.
Viehbacher now aims to reposition the company around a new Alzheimer’s drug, called Leqembi and developed in partnership with Japan’s Eisai, as well as a depression drug called zuranolone that’s currently under regulatory review in the U.S.
Part of that reorganization is pulling back from some of the risky and expensive drug research that’s historically filled Biogen’s pipeline.
“We’ve had five different heads of R&D in 10 years,” Viehbacher said. “That’s not good for an R&D organization and, as a result, we’ve ended up with some products that I think were relatively high risk and high cost, and not necessarily of the highest value.”
The company recently ended work on experimental drugs for stroke and rare neurodegenerative diseases, exited eye disease research and “refocused” its investment in gene therapy.
The job cuts announced Tuesday will deliver much of the expected cost savings, however, and come on top of previous layoffs Biogen conducted last year. The reduction of 1,000 positions will eliminate more than 10% of the company’s workforce, which totaled 8,725 at the end of last year.
On a call with reporters, Viehbacher said the company is reducing bureaucracy within the organization in an effort to speed decision-making.
“We regularly do a culture survey. One of the things that consistently comes out of that is it can take Biogen a long time to make a decision,” Viehbacher said. He did not give further specifics on which departments or locations would be most impacted by the cuts.
However, the company is trying to preserve the capabilities it needs to support the launch of Leqembi and, if approved next month, zuranolone. For the latter drug, Viehbacher said Biogen is building a field organization “separate and distinct” from the teams it has in place today.
Biogen also said it is in the process of considering options for its biosimilar drug business, which brought in just under $200 million in second quarter sales, or about 8% of total revenue.
Editor’s note: This story has been updated with additional comment from Biogen CEO Chris Viehbacher.