The need to revamp its drug pipeline by eliminating several research programs was a key factor behind Biogen’s recent decision to reduce its 8,000-person workforce by 11%, which will result in the loss of 880 jobs worldwide.
The Cambridge, Mass.-based biotech giant announced the layoffs, which include 400 positions out of about 3,300 in Massachusetts, on Oct. 21 as part of a corporate restructuring.
“The decision to reduce the company’s workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients,” CEO George Scangos said in a prepared statement.
According to the company’s statement, Biogen is expected to save $250 million a year as a result of the changes.
The company announced the job cuts as it buoyed its profit outlook and reported a 12.7% jump in third-quarter earnings to nearly $966 million, or $4.15 a share. Shares closed up almost 4 percent Oct. 21 to $276.34.
The stock, which traded as high as $480.18 in March, has plunged more than 15 percent this year, according to published reports. Still, Biogen’s market value of more than $60 billion remains the highest for any Massachusetts company, and the company is the world’s largest maker of multiple sclerosis (MS) drugs.
Part of Biogen’s plan includes revitalizing sales of Tecfidera, which is a key revenue driver and enjoyed a 19% sales increase in the last quarter. The company plans to use the savings from the job cuts to support sales and marketing of Tecfidera, which has been approved to treat relapsing forms of MS.
Biogen also has indicated that a late-stage trial of Tysabri, which treats secondary progressive MS, did not meet key goals.