The big asset swap between GlaxoSmithKline and Novartis may have given each company just what it wanted, but the deal continues to play out poorly for workers, with GSK planning to close its Pittsburgh office where it has about 275 employees working for its consumer health unit.
GSK spokeswoman Malesia Dunn said in an interview on Thursday that besides GSK’s office in Pittsburgh, the company and Novartis both had consumer health operations in the Parsippany, NJ, area. The plan now is to lease new space in the area and consolidate workers from the three locations there. Workers were told Wednesday that the process will begin soon and be complete by the end of the year. Some employees will be given a chance to move, she said.
“It will be a mix. Some employees will be offered opportunities to relocate, and if they choose not to or are not offered a position, they will receive a severance package,” Dunn said.
As part of the multibillion-dollar deal worked out last year, GSK and Novartis are creating a consumer healthcare joint venture that GSK will run. Novartis also took on GSK’s oncology portfolio and GSK got Novartis’ vaccines group. The idea is that each will beef up areas in which they can excel and exit markets they haven’t dominated.
The latest dislocation follows one earlier this month when GSK said it would establish a global vaccines hub in Rockville, MD, in the wake of the deal with Novartis. That move will force hundreds of staffers in Cambridge, MA, and Philadelphia to choose whether to move or lose their jobs.
GSK laid out plans earlier to cut more than 1,000 jobs–mostly in R&D–in North Carolina and Philadelphia. That reorg came after a slate of new product approvals failed to generate the kind of revenue that had been expected at GSK, forcing a rethink on how it allocates a multibillion-dollar R&D budget.
Novartis has been trimming its workforce as well, but the traditionally tight-lipped Swiss company has been somewhat circumspect about that. Novartis CEO Joe Jimenez recently said the company would make some “very significant” cost cuts, partly from the sale-and-swap with GSK and from its ongoing overhaul in back-office operations, which has included moving thousands of jobs to a center in India.
By Eric Palmer