GlaxoSmithKline's $1.57-bn restructuring to hit US jobs

British pharmaceutical giant GlaxoSmithKline (GSK) today said that it will cut 900 jobs in the Research Triangle Park (RTP) in the US as part of its global restructuring plan announced in October.

The London-based company, which employs 4,300 people in RTP in North Carolina, said that the restructuring will deliver approximately $1.57 billion of new annual cost savings over the next three years.

GSK, , Britain's biggest drug maker, employs around 17,000 people in the US and about 99,000 worldwide.

GSK will lay off around 350 people in the first quarter of 2015, while 450 will be eliminated in the second quarter and the remaining approximately 100 employees by the end of the year.
 
"We have started sharing with GSK employees the details of a restructuring program we announced at our third quarter results (Oct. 22). The aim of the program is to improve performance by taking unnecessary complexity out of our global operations and establish a smaller, more focused organization operating at lower costs to support our future portfolio,'' said GSK North American chief Deirdre Connelly in a statement.

"The changes are driven primarily by market changes, evolving customer needs and the overall US business environment. The details are still unfolding, but we expect as part of this restructure existing roles will be lost in our US R&D and commercial organizations by the end of 2015,'' the statement added.

The reduction of jobs will affect employees in Philadelphia, RTP and field staff. Retail sales teams focused on launching new medicines to the market will largely not be affected.  GSK said that it will consolidate R&D operations in two centres, in Philadelphia and Stevenage in the UK.

It also said that half of the affected employees in RTP will be offered jobs in a newly-created unit in another company, while some will be relocated to GSK's campus in the Philadelphia area.

GSK is struggling with declining sales, especially in the US mainly due to a fall in its respiratory business, which accounted for 30 per cent of its global sales last year.

GSK's pharmaceutical and vaccine revenue fell by 10 per cent in the US, but oncology product sales increased by 44 per cent between the third quarter of 2013 and the third quarter of 2014, while overall, revenues fell by 3 per cent over the year.

Advair, its best-selling asthma inhaler, accounting for almost 20 per cent of its sales, has been losing market share after patent expiry and the introduction of cheaper generic versions in the market.

Apart from Advair, GSK recently introduced two new asthama products Breo for COPD, which now has 72 per cent of US Medicare coverage, while Anoro has around 50 per cent. It is also soon expected to launch Incruse and Arnuity- an anti-IL5 treatment for severe asthma.

The US market is now getting tougher for pharmaceutical companies unlike in the past due to pricing pressure, and especially since it was fined $3 billion by the US government in 2012 for promoting two drugs for unapproved uses. (See: GlaxoSmithKline to pay record $3 billion in US drug fraud case)