The Axe Begins to Fall at GSK as the Company Plans for a Split with 935 Job Cuts in Belgium
One day after GlaxoSmithKline began to outline some of the broad strokes of splitting the company into two separate entities, more details are coming into place – particularly staffing concerns over the integration of the company’s vaccine business into its pharma operations.
Late Wednesday, GSK Vaccines, based in Belgium, announced the layoff of 720 employees from its operations in that country. On Wednesday, the company said a transformation plan was announced, which includes the termination of 720 employees, as well as the decision to not renew 215 temporary contracts. That’s a total of 935 positions being eliminated from the vaccines operation, which employs about 9,000 people. According to the statement, GSK said the eliminations would occur across R&D, manufacturing and quality service operations, as well as global support functions. Most of the terminations will be at the managerial level, the company said.
The layoffs will come as GSK intends to invest more than €500 million (about $548 million) over the next three years into its Belgian operations. The investments will be aimed at its R&D function in order to accelerate the development and the marketing of new vaccines, GSK said. GSK’s biggest vaccine in recent years has been Shingrix, which was approved in 2017 for shingles. Last year, the company invested more than $100 million into a Montana facility to expand the production capacity of key components of the adjuvant system used in several of GSK's vaccines, including Shingrix.
Patrick Florent, the managing director of GSK Vaccines in Belgium, said the company will ensure the changes to come will be addressed in a responsible manner and in accordance with GSK’s values. Florent stressed that GSK remains committed to Belgium, “which will remain at the heart of vaccine operations.”’
“As GSK increases its investments in R&D and in the launch of new products, this program aims to reinforce a common approach to R&D between the pharma and vaccine divisions, by improving the allocated funding and the decision-making concerning which vaccines or drugs to develop. This program will also allow the company to become more efficient,” GSK said in its announcement.
The announcement about the job cuts came shortly after GSK announced its intentions to separate the company into two standalone entities. One entity, dubbed New GSK in the announcement, will focus on pharmaceuticals and drug development, while the other will be aimed at consumer healthcare. GSK said the split of the company will take place over a two-year period and has multiple aims, including allowing the consumer health care business to operate as a standalone company.
“All of this aims to support future growth, deliver significant value creation, and set up two new leading companies in biopharma and consumer healthcare, each with the opportunity to improve the health of hundreds of millions of people,” GSK Chief Executive Officer Walmsley said in a statement.
The latest move is part of an ongoing effort by Walmsley and R&D head Hal Barron to shake up the company’s pharma business with an increased focus on the immune system and genetics. During her announcement about the separation of GSK into two separate entities on Wednesday, Walmsley said for this year, the company’s “first priority remains Innovation, to progress our pipeline and support new product launches.” She added that recent data readouts underpin the company’s decision to increase investment in R&D and new products. In 2020, GSK said it expects at least six potential approvals in oncology, HIV, specialty and respiratory indications. The company said it also expected proof of concept readouts on several key pipeline assets including four oncology medicines and vaccines for COPD and RSV.