Troubled GlaxoSmithKline Plans to Chop Up to 150 R&D Staffers in Philadelphia

Troubled GlaxoSmithKline Plans to Chop Up to 150 R&D Staffers in Philadelphia
March 18, 2015
By Mark Terry, Breaking News Staff

U.K.-based GlaxoSmithKline filed a WARN letter in late February with the state of Pennsylvania indicating another 150 people would be laid off in its commercial and research and development group near Philadelphia. The cuts are expected in the first half of 2015.

GSK will be downsizing its Commercial Research and Development functions,” said GSK human resources vice president Lisa Benna in the filing, “through the elimination of certain operating units located in Pennsylvania, including in and around Philadelphia.” Benna goes on to indicate that the job loss estimates are probably overstated.

This closely follows news on Jan. 22, 2015 that GSK had announced 1,000 layoffs in its China operations. These were in response to decreased revenue in the China market. A follow-up story on March 9, 2015 reported that at least 65 of those laid off in a recent 135-person cut were planning to appeal to Chinese labor authorities.

GSK’s U.S. operations are in the middle of a major restructuring initiative. In February 2015 the company announced that Deirdre Connelly, president of its U.S. pharma operations was retiring and would be replaced by Jack Bailey, former senior vice president for policy, payers and vaccines.

The company reported an overall drop of 3 percent in total revenue in 2014. Although pharmaceutical and vaccine sales in Emerging Markets grew by 5 percent and 1 percent in Japan, European sales were flat. In the U.S. sales decreased by 10 percent. This U.S. drop was related to formulary and contract changes to Advair.

“The U.S. marketplace has changed significantly,” Abbas Hussain, GSK’s head of global pharmaceuticals said in a statement, “with an exceedingly competitive payer landscape. As a result, the entire sector is facing new challenges due to pressures on price and access.”

The U.S. restructuring is expected to result in a loss of up to 900 jobs at its Research Triangle Park, N.C. research and development campus. Overall, the company has presented plans to lay off about 1,050 people in the U.S. However, a large group was transferred to jobs at a contract research organization (CRO).

A big part of the restructuring involves GSK’s joint venture with Swiss firm Novartis AG . The two companies are creating a joint consumer healthcare business. Novartis acquired GSK’s oncology products for $14.5 billion with another $1.5 billion contingent on development milestones. GSK paid $7.1 billion and royalties for Novartis’ vaccine business, excluding its influenza business. The joint venture is projected to generate about $10.9 billion in annual sales.

“As you know the transaction between GSK and Novartis just closed two weeks ago,” said GSK spokeswoman Sarah Alspach in a statement. “There is a significant amount of work that now needs to be done to integrate the Vaccines and Consumer Healthcare businesses, which is our focus for the immediate future…. It’s possible there may be site closures, though the specifics of our vaccines footprint are still being determined and it is too early to comment on when this might be finalized.”

BioSpace Temperature Poll
After Amgen Inc. said last week that it will close its South San Francisco facility acquired during its $10 billion buyout of Onyx Pharmaceuticals and will lay off 300 of Oynx’s 750 workers, BioSpace is wondering—will the number of mergers and acquisitions completed in 2014 mean a “streamlining” of biotech jobs in the Bay Area? Tell us your thoughts.

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