Job Cuts Loom Over GlaxoSmithKline As It Aims To Cut Costs; Eyes IPO Of HIV Unit

Job Cuts Loom Over GlaxoSmithKline As It Aims To Cut Costs

October 22, 2014

By Mark Terry, BioSpace.com Breaking News Staff

After a string of slow quarterly revenue, UK-based GlaxoSmithKline announced today that it will undergo major restructuring over the next five years in the hopes of cutting costs by £1 billion. Operating profit dropped by 37 percent in the last nine months.

“Of course it will affect jobs worldwide,” said GSK CEO Sir Andrew Witty in a statement, “but given the huge investment we are putting in here in Britain, on factories and research centers, and my expectation is the total number of jobs in this country will not be going down.”

GSK is also considering divesting itself of ViiV Healthcare, a standalone HIV treatment company. It also intends to refocus its global pharmaceuticals business and cost base as it divests its oncology products and deals with the respiratory market in the U.S. About £1 billion of the new costs savings are expected in the next three years, with about 50 percent of it occurring in 2016.

At least part of the company’s problems are caused by pricing pressures in the U.S., especially on GSK’s Advair, the company’s top-selling drug for asthma and COPD. Its new respiratory drugs, Breo and Anoro, have been slow to gain market traction.

The company has also been mired in a lengthy bribery and corruption scandal in China. GSK recently was fined almost $500 million by the Chinese courts. There have also been accusations of corruption and bribery in Syria, Iraq, Lebanon and Poland.

Part of the company’s restructuring will involves its Vaccines and Consumer Health divisions. In a company statement, Witty wrote, “In Consumer Healthcare, we will strengthen our position across multiple categories and become a global leader in OTC medicines. The new business will have 19 major brands each generating more than $100 million in sales.”

In vaccines, Witty indicates GSK will broaden and strengthen its portfolio, especially in the U.S., “including the integration of antigen supply currently provided by Novartis to GSK. The new vaccines business will also hold new R&D platforms and technology offerings in both viral and bacterial disease.”

Witty also indicates that they are very hopeful that their current vaccine for Ebola will be successful and on the market by the end of the year. In a statement, he said, “We are leaving no stone unturned; I fully expect GSK to be first company to make the first vaccine available, to government healthcare workers by the end of this year.”

Back to news