GSK on brink of big US job cuts

GlaxoSmithKline is gearing up to announce big job cuts as it stares down the barrel of increased competition to big-selling respiratory drug Advair, according to reports.

GSK's chief executive Sir Andrew Witty announced during its third-quarter results that it was embarking on a major new restructuring programme designed to "reshape our pharma business and release £1bn of annual cost savings."

Now, Bloomberg claims to have specific details of the plans, including hundreds of job cuts in the US, and says the company will go public with its plans tomorrow (December 3).

Around half of the savings are expected before 2016 and will come on top of earlier cost-reduction initiatives announced in 2013 as well as the $1bn in savings promised as a result of its asset-swap deal with Novartis, which is due to close early next year, according to Sir Andrew.

Advair/Seretide (salmeterol/fluticasone) for asthma and chronic obstructive pulmonary disease (COPD) is GSK's biggest-selling drug with turnover of almost $8.5bn last year, but analysts suggest it could lose a third of its US turnover (more than $4bn in 2013) in the coming quarters.

However, it is looking vulnerable to both generic competition and the introduction of newer drugs, particularly long-acting muscarinic antagonist (LAMA) and long-acting beta agonist (LABA) combinations that are reaching the market and expected to dominate the COPD category in the coming years.

Sir Andrew said last month that the new round of cost-cuts would be "blended across different parts of the organisation" but would affect sales and administrative functions, R&D and manufacturing by 2016.

"The aim of this program is to improve performance by taking unnecessary complexity out of our operations and establish a smaller, more focused organization, operating at lower costs, that supports our future portfolio," said the company's official announcement of the new restructuring.

Bloomberg's sources also claim that - aside from the job cuts - GSK would also be making changes to its recently-introduced initiative to separate sales reps' bonuses from sales performance and reward them based on technical knowledge and the overall performance of GSK's business.

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