Biogen has begun to lay off employees as part of a previously disclosed effort to lower annual expenses by half a billion dollars. The move comes as the Cambridge, Massachusetts-based drug company tries to overcome challenges in selling a new and controversial treatment for Alzheimer's disease, as well as recover from setbacks to its business elsewhere.
Biogen declined to provide specifics about how many employees will be affected, what roles they hold or which of its departments will see the biggest impact. Allison Parks, the company's associate director of global external communications, noted in an email to BioPharma Dive that "due to resignations and some employees being eligible to apply for open positions, the number is fluctuating."
By the end of last year, Biogen had approximately 9,600 employees, a headcount which contributed to nearly $2.7 billion worth of selling, general and administrative expenses. Such expenses rose over the last year as Biogen geared up for the launch of that Alzheimer's drug, called Aduhelm and approved last June.
Aduhelm is the first treatment cleared in the U.S. for what many researchers believe to be the root cause of Alzheimer's. With a title like that, analysts had expected sales of the drug to rise quickly once it was on the market. But so far, Aduhelm's performance has been sluggish, in large part because Biogen has struggled to convince doctors to prescribe the drug and major insurance providers to cover it.
Analysts have since drastically pared back their forecasts for Aduhelm sales, which, in the final three months of 2021, totaled just $1 million.
Alongside the lower-than-expected sales for Aduhelm, some of Biogen's most important and top-selling products have started to succumb to new competition. The company recorded almost $11 billion in revenue last year, down 18% from 2020.
With its bottom line in trouble, Biogen announced in December that it would implement cost-cutting measures designed to save the company around $500 million in annualized savings. Executives later detailed how the bulk of these cuts — about $350 million worth — would take place in 2022, and that even more could take place if the outlook for the business didn't improve.
"We have to protect the company's [earnings per share] and bottom line, and we will take additional measures," CEO Michel Vounatsos told investors in January.
Layoffs are one of the ways Biogen now intends to lower costs. In an email Thursday, Ashleigh Koss, Biogen's global head of corporate communications and media, wrote that "some of our colleagues in the U.S. were today informed that their roles are being eliminated."
"These changes will help the company remain flexible so additional investments can be made in our pipeline and other strategic initiatives," Koss added. Of Biogen's roughly 9,600 employees, about 5,600 are located in the U.S.
Previously, STAT News reported that Biogen was preparing for the largest workforce reduction in the company's history, with more 1,000 jobs set to be terminated this year. The last time Biogen conducted layoffs at such a scale was in late 2015, when it cut roughly 10% of jobs in a restructuring meant, in part, to refocus resources around Aduhelm.