Dwindling sales mean job cuts at GSK
pharmafile | October 25, 2007 | News story | Sales and Marketing | Avandia, diabetes
GlaxoSmithKline saw sales in its pharmaceutical division dip 2% in the third quarter, as falling demand for Avandia continued to hit the company.
In May this year, a safety scare over the drug saw many US prescribers abandon it, and the company has now accepted that the drug may never return to strong growth.
US sales of Avandia were down 38% compared to the same time last year, totalling $463 million. Sales in Europe dropped 11%, while in all other markets revenues fell 22%.
In response to this and other pressures, the company has announced major structural changes and cutbacks aimed at saving of around $1.4 billion by 2010, which will include job cuts in all divisions.
Chief executive Jean Pierre Garnier said: "We are very conscious that these initiatives will impact our staff in certain areas of our business and we regret that job reductions will be a necessary part of this programme.
"However, by making the changes we envision, GSK will be better placed to address the challenges we face in 2008 and be in a stronger position to create long-term value for patients and shareholders."
Plans to increase R&D investment and streamline manufacturing have been designed to lessen the anticipated dent in next year's sales, which will result from more generic competition.
More positively for GSK, its flagship product Seretide/Advair for the treatment of asthma and COPD was up 7% to £835 million on last year's third quarter.
Lamictal, a treatment of epilepsy and bi-polar disorder, also grew of 14% to £558 million.
Garnier added: "GSK remains on track to meet its earnings guidance for the year, despite significant challenges. We continue to strengthen 15 products launched, approved or filed so far this year, and we remain very focused on delivering more from our late-stage pipeline."
Garnier is now preparing to hand over to his successor, Andrew Witty, currently president of Pharmaceuticals Europe at GSK, who was chosen as the new chief executive through a long-running procedure between three in-house candidates.
Witty takes over in May, when Garnier will step down from the role he has held since GSK's formation in 2000.
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