April 20, 2015
By Mark Terry, BioSpace.com Breaking News Staff
When an international corporation comes into a region, or leaves that region, its impact has a ripple effect on the local economy in numerous ways. In light of recent job cuts by GlaxoSmithKline in Research Triangle Park, N.C., the effects on the local airline industry are being examined.
In 1994, American Airlines debuted a direct flight from Raleigh-Durham International Airport to London. The reason for that flight was straightforward—to accommodate travel for GlaxoSmithKline executives and scientists between its London headquarters and Research Triangle Park facilities. The flight, at that time, cost about $800 round trip.
“We were flying private airplanes back and forth every day from London to Raleigh-Durham,” says then-Glaxo chief executive officer Bob Ingram in a statement. Ingram then personally met with then-chief executive officer of American Airlines, Bob Crandall . “We agreed that, with some incentives from Glaxo, they would put that flight in.”
Although the numbers are hard to pin down, media reports in the late 1990s indicate that Glaxo booked more than 100 flights per month to the U.K. The governor of North Carolina at the time, Jim Hunt, spent $5 million on an ad campaign trying to convince Europeans to visit North Carolina for vacation.
This is just one example of how a large biopharma company’s presence can affect the local economy and jobs. London-based GlaxoSmithKline has been conducting a series of layoffs at various locations worldwide, including 180 in North Carolina in March, 150 in Pennsylvania in February, and 1,000 in its China operations in January. In December 2014 the company announced it would lay off 900 people in research and development at its Research Triangle Park facilities.
These are part of a major company-wide restructuring that expects to save $1.6 billion in annual costs over three years.
Apparently American Airlines’ flights to London and Europe are no longer dependent upon GSK. American Airlines has indicated that they will be keeping the flight to England, but will, in fact, use a larger plane, a Boeing 777, starting June 4. It’s temporary, though, while it refurbishes the Boeing 767 that flies that route.
In support of this kind of ripple effect, Michael Walden, a professor at North Carolina State University, conducted a study that concluded that a new international flight would raise the state’s gross domestic product (GDP) by $1.4 billion over a 25-year period. In addition, it would create 14,000 new jobs and an additional $272 million in public money.
This might explain the concerns expressed by Moon Township, Pennsylvania business leaders over GSK closing its regional headquarters in the Pittsburgh suburb. A GSK facility had been in that spot for 40 years. “I think it’s going to depend on what leaves with them,” said Bernadette Puzzuole, president and chief executive officer of the Pittsburgh Airport Area Chamber of Commerce in a statement. “How many vendors will be affected, how many employees will be moving, how many houses will go on the market and how many of those houses are in Moon?”
BioSpace Temperature Poll
After last week’s news that Gilead had issued a health advisory to doctors, concern is growing after nine patients taking Harvoni or Sovaldi along with another drug, amiodarone, were treated for abnormally slow heartbeats. One of the patients died of cardiac arrest. Three of the nine patients required a pacemaker. That has BioSpace asking, what next?
