GlaxoSmithKline To Cut Hundreds Of U.S. Jobs
December 1, 2014
By Mark Terry, BioSpace.com Breaking News Staff
British drugmaker GlaxoSmithKline plans to announce details of its planned U.S. layoffs on Wednesday, cuts the company said in October would be part of a major restructuring that would save over $1.6 billion in annual costs over three years.
To date the company has not released details on layoffs. An unnamed GSK spokesman, in an email to Reuters wrote, “Each business unit is currently deciding how to respond to this challenge. When we do have proposals, we will first share those with our employees.”
In the third quarter announcement, the company indicated a three-pronged approach to long-term financial performance, including diversifying its global business, delivery more products of value, and simplifying its operating model.
“This new restructuring program will rescale commercial operations, global support functions and relevant R&D/manufacturing across pharmaceuticals and is expected to deliver cost savings incremental to the existing announced programs and additional to the benefits anticipated from the proposed Novartis transaction,” the company indicated in an Oct. 22 press release. “All restructuring proposals affecting headcount will be subject to employee consultation where applicable in accordance with legal requirements.”
Behind some of the U.S. restructuring is the sagging U.S. sales of the company’s blockbuster asthma medication, Advair. Analysts have projected that sales of the drug will drop by 30 percent by 2015. In 2013 sales of Advair were $5.3 billion.
“After stagnating for years, Advair sales have taken a dive and Glaxo lacks growth drivers right now,” said Philippe Lanone, an analyst at Natixis Securities in Paris in a Bloomberg article. “It makes sense they would take a hard look at costs.”
Additional changes are being made to the company’s sales professional policies. Changes include how the company tests its sales staff on knowledge of their products, simulations of doctor interactions, as well as management observation of sales meetings. In 2010 the company ceased to tie bonuses to sales targets, instead rewarding sales staff for their scientific knowledge. At least some of this is related to a bribery scandal in China that resulted in $500 million in charges and criminal charges against GSK’s China general manager Mark Reilly and four other company managers.
In addition to restructuring of U.S. jobs, GSK is considering divesting itself of ViiV Healthcare, a standalone HIV treatment company. It will broaden and strength its vaccines portfolio as well. In an October statement, company CEO Sir Andrew Witty said, “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.”