Astellas Pharma is staring down a $6 billion patent cliff for its prostate cancer treatment Xtandi and aims to counter the inevitable decline in revenue with a 200 billion yen ($1.3 billion) cost-cutting program included in a new five-year strategic plan. However, CEO Naoki Okamura says, “It’s not just about saving costs or reducing headcount.”
The Tokyo-based pharmaceutical company has launched a series of cost optimization initiatives. In an interview with Fierce, Okamura said that while some low-hanging fruit can have an immediate impact on a company’s bottom line, more systemic changes will take time to fully mature. As a result, the 200 billion yen target will be achieved in stages over the next few years, with 40 billion yen in 2026 and 45 billion yen in the following year.
Mr. Okamura said that the foundation has been laid by both the efficiency improvements made so far and the new management plan, and that “we will move from the investment phase to the harvest phase from 2026 to 2027.”
“It’s not just cost optimization, it’s the way we do business,” Okamura said.
The new blueprint relies heavily on internalizing core research and development functions, introducing new technologies, and centralizing scattered functions to transform Astellas into a flatter organization.
“We are committed to creating a more effective and efficient organization to truly support our strategic brands and the products that result from our focused approach,” Okamura said.
Improved agility
According to Okamura, Astellas has already reduced annual spending by 65 billion yen over the past two years, with the reductions being roughly evenly distributed between selling, general and administrative expenses and research and development expenses. Going forward, Okamura expects the rate of layoffs to remain about the same, but to be more heavily skewed towards the commercial sector due to its larger size.
On the research and development front, Astellas has moved away from its previous dependence on CROs and brought clinical development operations in-house.
“The pipeline has changed,” Okamura says. “We don’t do studies anymore where we study 1,000 subjects in three arms.”
Again, Okamura emphasized that the goal is not only to reduce vendor costs, but also to improve efficiency and get medicines to patients faster. By removing the vendor layer, Astellas was able to establish a direct line of communication with clinical researchers, dramatically increasing clinical trial agility and reducing interactions with contractors during study initiation and modification.
This change has already resulted in an internal record-breaking 27-day uptime. The time it took for an investigational drug to be approved and administered to the first patient used to take an average of three months.
In parallel, AI recently became part of Astellas Pharma’s medical writing process. While human oversight is still required for the final review, having AI draft the initial document can save a lot of time, Okamura said.
Hierarchy reduction
Perhaps the most disruptive element of Okamura’s new plan is a rethinking of Astellas’ corporate architecture.
Over the past decade, Astellas Pharma has been transitioning from a geographical management model to a functional organization. Now, the 21-year-old company is taking that evolution even further, structuring its business to revolve around a subject: assets.
Under this new framework, cross-functional teams will be given full decision-making authority for programs from initial research through the end of the product lifecycle, with responsibility and accountability.
“The members change over time, but there is only one team in charge,” Okamura explains. “They can make their own decisions. They can make course corrections. That’s Astellas’ modern, agile way of working.”
This structural redesign also stems from dissatisfaction with traditional corporate bureaucracy. In Astellas’ traditional model, cross-functional teams already existed, but their hands were tied. All members always reported to their respective departments and had to climb the internal ladder to reach decision makers. By the time the feedback was filtered back to the assets team, the group had to conduct its own discussions to reach an initial conclusion. And the cycle repeated itself, what Okamura described as a “time-consuming and counterproductive” loop.
From now on, department heads will only have a support role, and the asset team will make decisions.
“It’s much faster and more relevant because it’s the closest the team is to actually tackling the problem at hand,” Okamura said.
To support its structural design, Astellas Pharma is establishing a global capability center.
“The Global Competency Center is more than just a worker arbitrage; it is consolidating fragmented capabilities into one site,” Okamura said.
Rather than having members with the same function spread across different countries, resulting in communication delays, Okamura consolidates members into one location. This will enable property teams and local commercial organizations to leverage the centre’s services and capabilities in a more efficient manner.
As an example, Okamura expects to see significant cost savings over the next few years by centralizing marketing materials.
“Now, in every country and every brand team, their own vendors produce their materials,” Okamura explained. “Of course, there are differences in language and medical practices in each country, but the core content should be the same for each brand.”
Looking at the bigger picture, this change has the potential to dissolve regional organizational hierarchies and, in Okamura’s words, “align the hierarchies into one layer.” With a leaner organizational structure, the CEO believes there is potential to deepen relationships with customers and expand the company’s footprint into smaller countries.
“We can really focus on customer engagement in our country operations, and then we can pull all the support functions out of those country operations and put them in our global competency center,” he said.
“Of course, some believe that losing Xtandi will reduce revenue and therefore require a reduction in footprint,” Okamura said. “No, I think the other way around. Because we can use technology, we can also scale.”
Build a bridge to growth
After all, all of these structural reforms are aimed at benefiting the company’s products. In addition to Xtandi, partnered with Pfizer, whose patents are set to expire around the world this year, Astellas has identified five strategic brands: Padcef, an antibody-drug conjugate partnered with Pfizer, Vairoi, a gastric cancer treatment, Izervay eye drops, Veozer, a treatment for menopause, and Zospata, a leukemia treatment.
Together, these six brands are expected to account for 50% of Astellas’ revenue mix by fiscal 2030, and 23% by fiscal 2025, which ended in March this year.
Astellas Pharma is eyeing at least five important studies in its pipeline Additionally, the company aims to reach proof-of-concept decisions on six candidates by fiscal 2027. All told, Astellas estimates its pipeline could deliver risk-adjusted revenues of about 1 trillion yen ($6.25 billion) by the mid-2030s.
Okamura suggested that Astellas Pharma’s current pipeline is in “fairly good shape” and “adequately diversified” with no single product accounting for more than 50% of its overall revenue forecast. However, the company’s business development team remains busy.
Alongside cost reductions, Astellas plans to allocate 850 billion yen ($5.3 billion) over the next five years to deals and other strategic investments. According to Okamura, the company plans to actively utilize these funds.
The company will pursue deals where it already has an established presence “either in a technology platform, therapeutic area or franchise,” Okamura said. Okamura led Astellas Pharma’s BD division as chief strategy officer for many years before becoming CEO in 2023.
He pointed to Astellas’ recent collaboration with Vir Biotechnology on the company’s PSMA-targeted T-cell engager VIR-5500. Prostate cancer is a focus area for Astellas, and the company has been researching TCE for several years.
Next, he said Astellas could add assets in ophthalmology to leverage existing experience with Iserbay and its stem cell drug candidate ASP7317, which is in pivotal trials for geographic atrophy.
The $5.3 billion allocation equates to up to $1 billion a year to close deals, Okamura noted.
“That means we don’t want to use up our strategic investment capacity by making large acquisitions,” he said. “We would rather pursue a risk-mitigating, risk-sharing type of structure with our partners.”
A new five-year plan has just begun and “we can be selective about our opportunities,” he said.
