Drugmaker GlaxoSmithKline will move research and development jobs to its existing operations in the Philadelphia region, but also layoff some commercial employees in the area as part of the $1.57 billion restructuring plan that was announced in vague terms in October and explained with some detail Wednesday.
GSK, which is based in London, will significantly reduce its R&D operation in North Carolina's Research Triangle Park, moving some of those jobs to facilities in Upper Merion and Upper Providence, Montgomery County.
In a statement, GSK said the Philadelphia region and facilities in the United Kingdom will become research hubs.
The company would not specify how many jobs would be added or subtracted. Group meetings were being conducted with employees Wednesday. People will start to leave the company in the first three months of 2015, according to a company spokeswoman.
The GSK statement said in part, "In R&D, the majority of jobs affected are in Research Triangle Park (RTP), NC, as we consolidate our geographic footprint and locate the majority of our R&D organization into two major centers– in the Philadelphia area and Stevenage (UK). Some R&D roles will be relocated to the Philadelphia area and some staff will be offered relocation. We will be working with local employers to support staff securing re-employment.
"In the U.S., we are 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. Cuts are not being made across the board but are strategic, focused changes to allow GSK to operate more efficiently. This is not a change in our strategy, which has helped us deliver more new medicines than any other company in the industry in the past 18 months. This is a rescaling of work to reflect market forces that were anticipated but that have accelerated and are affecting the entire industry.
"The reduction of jobs in our U.S. Pharmaceuticals business will affect employees in Philadelphia, RTP and the field. Retail sales teams focused on launching new medicines to the market will largely not be affected. Our proposed changes to R&D will sharpen the focus in discovery and development and reduce funding in certain areas of the pipeline.
"We have continued confidence in the opportunities before us. We have a pipeline with promising innovations for patients in the areas of respiratory, HIV, immuno-inflammatory diseases, genetic conditions and more. We have transformed the way we work to better listen to our customers and serve patients. We know that much of that success came with the support of employees who now are being affected by this restructuring. We recognize that this will be a very challenging and difficult time for our people across the organization.
The $1.57 billion figure was announced in October, when GSK reported third-quarter financial results. Slowing sales of its established (and top-selling) asthma drug, Advair, and slower-than-hoped immediate use of newer asthma medicines prompted concern.
North American pharmaceutical chief Deirdre Connelly, who works from the company's facility at the Philadelphia Navy Yard, addressed U.S. employees Wednesday.
GSK has more than 1,000 employees at the Navy Yard, which was the site of a ceremony Tuesday to give $40,000 to each of nine Philadelphia-area nonprofit organizations. Not long after, President Obama visited a laboratory at the National Institutes of Health in Bethesda, Md., where scientists are working on the first Ebola vaccine tested on humans. About 300 Philadelphia-area GSK workers are involved in that effort.
Other GSK groups are employed in Upper Providence, Upper Merion, Conshohocken, Marietta and Pittsburgh, along with Parsippany, N.J. Those facilities have employees from most divisions of the company and sales representatives work in this area.
Before the cuts, GSK had about 4,500 employees work in two North Carolina facilities, with one focusing on research and a smaller one that manufactures medicine. The company also has a small office in Boston. GSK had 99,451 employees worldwide at the end of 2013, according to its annual report.
Novartis and GSK signed a multi-billion dollar three-pronged deal in April that involved GSK giving Novartis its current oncology drugs in exchange for all but one of Novartis' vaccines, cash and the majority stake in a joint venture to sell non-prescription consumer products.
Though the U.S. pays the most for prescription drugs, the market is getting tougher for pharmaceutical companies to make the profits they once did. GSK CEO Andrew Witty is hoping that a narrower pharmaceutical division, along with vaccines and consumer products will translate into sustainable profits in a worldwide market.