GSK confirms hundreds of US job cuts
pharmafile | December 3, 2014 | News story | Medical Communications, Research and Development, Sales and Marketing | Advair, GSK, Parexel, RTP, anoro, breo, job cuts, respiratory
GlaxoSmithKline has finally confirmed the rumours that it is cutting hundreds of US jobs as the UK firm struggles to make headway in its respiratory market.
In an emailed statement to Pharmafile, the company says it has started sharing with its employees the details of its restructuring programme in order to support a ‘future portfolio’.
It adds that the ‘details are still unfolding’ but that it expects existing roles will be lost in the firm’s US R&D and commercial organisations by the end of 2015.
“The majority of jobs affected are in Research Triangle Park (RTP), NC, as we consolidate our geographic footprint and locate the majority of our R&D organisation into two major centers – in the Philadelphia area and Stevenage (UK).
“Some R&D roles will be relocated to the Philadelphia area and some staff will be offered relocation. In the US, we are reshaping and reducing the size of our commercial and R&D operations (now 17,000 employees).”
GSK adds that the reduction of jobs in its US business will affect employees in Philadelphia, RTP and the field. Retail sales teams focussed on launching new medicines are said to be largely unaffected.
Whilst GSK has not offered any specific numbers around the amount of heads that will be rolling in the move, reports state it is eliminating 900 jobs – with 350 of those going in the first quarter of 2015, and another 450 over the following three months. The rest are set to be axed later in the year.
When pushed for more details the pharma giant adds: “We don’t know precisely how many employees will be affected. We’re looking to minimize job losses through measures such as recruitment freezes and not filling vacant roles.
“Also, GSK and PAREXEL have signed a letter of intent regarding the creation of a dedicated GSK business unit within PAREXEL. It will provide a variety of clinical development services and be largely based in the RTP area. Under the agreement, approximately 450 employees currently working in R&D in RTP will be offered roles at PAREXEL.”
The scaling back was announced alongside its third-quarter results in October which outlined attempts to save around $1.6 billion in annual costs across three years, but it has waited until now to pinpoint where the axe is to fall.
As is all too familiar in such circumstances, GSK says the aims of the restructuring are to “improve performance by reducing complexity and establishing a smaller, more focussed and lower-cost organisation”.
Respiratory medicine has long been the firm’s strongest business, but whilst inhaled therapy for asthma and chronic lung disease Advair (salmeterol and fluticasone) was its biggest seller – sales are now flailing in the US, and the momentum behind newer lung drugs Anoro (umeclidinium bromide/vilanterol) and Breo (fluticasone furoate/vilanterol) is disappointing.
According to the Financial Times US respiratory drug sales account for 12% of GSK’s total business, and declined by 17% in the first nine months of this year – a considerable blow.
It highlights wider issues affecting downturns, such as industry executives pointing to consolidation in the US healthcare market that gives insurers and providers more leverage over drugmakers, along with president Barack Obama’s healthcare reforms that have intensified the pressure to lower prices.
US insurers who are under pressure themselves to keep premiums in line, are clearly pushing back hard on prices for medicines in sectors like respiratory and diabetes where there are multiple options for patients and doctors alike.
Torrid time for firm
It has been a tough year for GSK that has seen the company weathering sex tape scandals and multiple bribery allegations across the globe, including in China, Poland and even Iraq and Syria.
In September China fined the company a record penalty of $490 million after a court found GSK guilty of paying out bribes to doctors and hospitals in order to have its products promoted.
But it has also shone in moments of promise, like having a potential Ebola vaccine candidate looking good in early trials; and topping the league of pharma companies doing the most to improve drug access to developing countries.
These job losses arrive ahead of a major pact with Swiss rivals Novartis that sees the manufacturers combine their consumer health units under GSK’s majority (63.5%) control, while also in effect swapping some of their major assets.
GSK will also sell its cancer portfolio to Novartis for a maximum of $16 billion, and in turn Novartis will let GSK acquire its own vaccines business for up to $7.1 billion – a business that made a loss in the last quarter.
On top of that GlaxoSmithKline announced that it is looking to float its fast-growing HIV drugs business ViiV Healthcare to help shore up its finances – an operation said to be valued up to $27 billion.
Brett Wells
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