CSL is laying off up to 15% of its workforce as the Australian pharma looks to cut R&D costs and spin out its vaccine subsidiary in a wide-ranging restructure.
The Melbourne-headquartered company will “reduce the proportion of fixed cost in overall spend, and implement initiatives to increase pipeline productivity, including consolidation of R&D footprint,” according to its full-year earnings release this morning.
The savings from this cost-cutting will be “directed towards priority programs and developing new disease targets from both internal and external sources,” CSL explained.
The company previewed the move last month, telling Fierce Biotech that CSL was undergoing “a strategic review of its R&D operations” designed to reduce duplication and improve efficiency.
“We will increasingly depend on a more optimal mix of internal capabilities and external partnerships to build and deliver our R&D pipeline,” a CSL spokesperson told Fierce in July. “This will require a smaller global internal workforce in the future.”
At the time, the company wouldn’t set out how many staff would be impacted by this new strategy, but today’s documents estimate that up to 15% of employees will lose their jobs.
The layoffs are expected to cost between $700 million and $770 million before taxes in the 2026 financial year. Overall, the restructuring should save the company between $500 million and $550 million a year progressively over the next three years.
The R&D setup is only one area of CSL’s work that will be shaken up as part of the strategic shift. The company also unveiled today a “distinctive new Portfolio Development and Commercialisation (PD&C) operating model” that will integrate the R&D, business development and commercial teams.
CSL operates via several business units: CSL Behring, which includes CSL Plasma; CSL Seqirus; and CSL Vifor. CSL Behring focuses on rare and serious conditions like bleeding disorders, immunodeficiencies and neurological disorders. Meanwhile, CSL Seqirus is a influenza vaccine subsidiary and CSL Vifor focuses on iron deficiency and nephrology.
As part of the restructure, CSL Seqirus will be demerged in order to list as an independent company on the Australian Stock Exchange by the end of the next Australian financial year, which ends June 30, 2026.
“A demerger will allow autonomy to set an independent strategic direction, including capitalising on potential opportunities that may arise in a highly dynamic vaccines market, as well as reducing complexity, making the business more agile and efficient to manage,” CSL said in the release.
Meanwhile, CSL Vifor—which produces the iron replacement therapy Venofer—and CSL Behring will combine their medical and commercial functions in order to “deliver further synergies and additional revenue growth opportunities.”
In the fall of last year, CSL Behring—which produces hemophilia gene therapy Hemgenix—shuttered its U.S. R&D hub for cell and gene therapy in Pasadena, California. About 60 workers at the site were affected, a person familiar with the process told Fierce at the time.
The decision was part of a larger rethink around ex vivo lentiviral-vector-based gene therapies at CSL, the person told Fierce. The company’s gene therapy labs and manufacturing facilities in Marburg, Germany; Bern, Switzerland; and Sydney, Australia, were also undergoing changes at the time, the person said.
In this morning’s release, CSL CEO Paul McKenzie, Ph.D., said the business has “grown this year despite an unprecedented level of challenge and volatility in our external operating environment.”
“Today we are announcing transformational initiatives to reshape and simplify the business, enhance clinical and commercial execution and provide a platform for CSL to focus on our core strengths," McKenzie added.
"These changes are designed to focus our organisation on three Ps: pipeline, productivity and people,” the CEO said. “They will make us match-fit and instil a lean and efficient mindset, reduce complexity and simplify our operating model.”
Despite posting a 14% year-over-year increase in underlying profits after taxes, CSL’s shares dropped 16.9% over the course of Tuesday’s trading to close at 225.50 Australian dollars.