Sector News

Struggling GlaxoSmithKline warns of 150 R&D job cuts in Philadelphia

March 18, 2015
Life sciences
Close to three months after GlaxoSmithKline revealed that it is making deep cuts in its R&D group in North Carolina as part of a major reorganization in the U.S., the pharma giant detailed plans to ax up to 150 staffers and shutter units in its commercial/R&D group in the Philadelphia area. GlaxoSmithKline has now outlined plans to lay off about 1,050 staffers, though one large group of employees was transferred to new jobs at a CRO. And a company spokesperson notes that the company is still evaluating how it plans to integrate hundreds of more workers involved in a major asset swap with Novartis ($NVS).
 
Alerting state officials in Pennsylvania in a WARN letter, a company official said that there are no plans to close any facilities but “GSK will be downsizing its Commercial Research and Development functions through the elimination of certain operating units located in Pennsylvania, including in and around Philadelphia.”
 
The letter, sent by HR vice president Lisa Benna in late February, goes on to note that the estimate of job losses “is likely an overstatement,” with the cuts coming in the first half of this year.
 
When GlaxoSmithKline first discussed its cuts with reporters last December, the company noted that there would be cuts in the Philadelphia area as well as North Carolina, but declined to spell out how many positions were on the chopping block in either region, saying that the full figure was still being assessed.
 
As the cuts were being made at the end of 2014, though, GlaxoSmithKline was notifying officials in North Carolina that it would eliminate 900 jobs in its big Research Triangle Park operation, with 350 jobs going in the first quarter of 2015 and 450 more jobs out of the company in the second quarter. The rest would follow. Not all of the job cuts ended in unemployment, though. About 400 staffers were spun out to the CRO Parexel as GlaxoSmithKline worked to soften the impact.
 
The ongoing changes at GlaxoSmithKline began a few years after its R&D group adopted small, “biotech-like” research units as a solution to its productivity problems. Two years ago GSK came back with a slate of 5 new drug approvals, but new drugs like Breo fell short of initial expectations, leaving the company facing increasingly disenchanted analysts disappointed by its lackluster financial performance. A bribery scandal in China didn’t help matters.
 
The R&D reorganization was one answer to the problem, though some analysts expect that more will need to be done before the company can get back on track.
 
The cuts at GSK in North Carolina and Pennsylvania are a prelude to some big changes expected as Glaxo spins out its cancer R&D operations in the Philadelphia area in exchange for Novartis’s big vaccines unit. Asked about the future of the 350 or so jobs at Novartis vaccines unit in Cambridge, MA, spokeswoman Sarah Alspach replied that while site closures are possible, no final plans are in place.
 
“As you know the transaction between GSK and Novartis just closed two weeks ago,” noted Alspach in an email to FierceBiotech. “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. The Novartis acquisition strengthens the breadth of our portfolio, including in the US, where we are absolutely committed to growing our vaccines presence. 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.”
 
Over the past 90 days the biopharma industry has been hit with repeated cutbacks around the U.S. The WARN letter spells out upcoming R&D cuts in a region that is bracing for Shire to start moving or laying off up to 600 of its staffers in Pennsylvania as it concentrates its R&D group in the Boston area.
 
But that’s not all. Sanofi cut 100 in Boston as it downsized a struggling cancer R&D operation. Merck laid off 120 at Cubist. AstraZeneca is finalizing a spinout of its anti-infectives unit in Massachusetts that will take a unit that once employed 175 and reduce it to a fragment of that. Pfizer has made cuts along with Merck KGaA and others. Biogen Idec has been axing staffers on a group-by-group basis, searching for greater efficiency as its R&D arm grows. And Amgen said just days ago that it would lay off 300 as it integrated Onyx into its California facilities.
 
By John Carroll
 

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