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US R&D hit in GSK's latest cost-cutting round

CRO Parexel rumoured to contract “up to 450” GSK employees

GSK - logo on building 

GlaxoSmithKline (GSK) has still made no official announcement of the cutbacks that will accompany its recently announced cost-cutting drive, but it appears the axe will fall heavily on its Research Triangle Park (RTP) operations in the US.

Documents filed with the state authorities in North Carolina suggest some 900 jobs will be lost at the RTP site as GSK tries to achieve the £1bn ($1.6bn) in annual cost-savings promised by chief executive Sir Andrew Witty in its third-quarter results statement.

That would represent around 20% of the 4,500 people employed by GSK at the RTP campus, according to local news reports, which also suggest some employees will be given the opportunity to transfer to GSK's other main US research site in Philadelphia.

There are also rumours circulating that contract research organisation (CRO) Parexel could pick up the contracts of some of GSK's workforce. GSK and Parexel have reportedly signed a letter-of-intent to create a GSK-dedicated unit within Parexel's RTP unit that could employ "up to 450" employees.

GSK's hand has been forced by the onset of competition to its big-selling chronic obstructive pulmonary disease (COPD) therapy Seretide/Advair (salmeterol and fluticasone), which pulled in $8.5bn for the company last year but is expected to fall off dramatically in 2015 and 2016.

Generic rivals will play a large part of that, although Advair is also facing strong competition from a new generation of COPD drugs which combine long-acting muscarinic antagonist (LAMAs) and long-acting beta agonist (LABAs) compounds and are expected to lead the market within a few years.

While GSK has its own LABA/LAMA product approved for marketing - Anoro (vilanterol and umeclidinium bromide) - several other combinations are also on or nearing the market and GSK will probably have to settle for a smaller slice of the COPD market pie.

Mary Anne Rhyne, GSK's director of US external communications, said in a statement that the company is "reshaping and reducing the size of our commercial and R&D operations (now 17,000 employees) to be more agile to flex with shifting market demands."

Sir Andrew said in October, when GSK reported third quarter turnover was down 10% to £5.6bn, that the cuts would be applied selectively across the organisation and would "take unnecessary complexity out of our operations and establish a smaller, more focused organisation - operating at lower costs - that supports our future portfolio.”

This was echoed by Rhyne who said: "Cuts are not being made across the board but are strategic, focused changes to allow GSK to operate more efficiently." Jobs will be lost in the US R&D and commercial functions by the end of 2015, she confirmed.

GSK has already announced its intention to sell off part of its HIV-focused joint venture ViiV Healthcare as part of the latest restructuring initiative, which extends earlier cost-reduction initiatives announced last year.

It has also agreed an asset swap deal with Novartis which will see it take over the latter's vaccines business in return for a portfolio of oncology drugs.

Article by
Phil Taylor

4th December 2014

From: Research, Sales



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