GlaxoSmithKline changes leadership of U.S. unit

The drugmaker GlaxoSmithKline P.L.C. promoted Jack Bailey to replace Deirdre Connelly as head of its struggling U.S. pharmaceutical operations.

Connelly, 54, will retire after six years as president for North America, London-based Glaxo said in a statement to its employees Monday. Bailey, who joined Glaxo in May 2009 and was most recently senior vice president for policy, payers, and vaccines, will step into his new role immediately.

Connelly worked from the Philadelphia Navy Yard, one of several GSK facilities in the Philadelphia region. Bailey will continue to work from GSK's facility in North Carolina.

The changes underscore the pressure on chief executive officer Andrew Witty to turn around the U.S. business, which accounts for almost a third of GSK's sales. Shares of the company have slumped about 8 percent in the last year, and fourth-quarter earnings declined from a year earlier. Witty in 2014 cut prices for respiratory medicines to regain market share and revive slumping sales.

Connelly, a former Eli Lilly & Co. executive, has been in the spotlight for months as U.S. drug sales dropped from 2009, when she took the helm. As part of a management reshuffle last year, she began reporting to Abbas Hussain, GSK's head of global pharmaceuticals, rather than directly to Witty.

"The U.S. marketplace has changed significantly, with an exceedingly competitive payer landscape," Hussain said in the note to employees Monday. "As a result, the entire sector is facing new challenges due to pressures on price and access."

GSK is in the process of selling its oncology business to Novartis AG, buying most of Novartis' vaccines unit and forming a joint venture for consumer health.

In trading on the London Stock Exchange, shares of Glaxo fell 9 percent, extending its decline over the last year to almost 8 percent. That compares with a 25 percent advance in the Bloomberg Europe Pharmaceutical Index.

GSK pledged in October to cut costs by $1.54 billion over three years, with half the savings coming in 2016.

U.S. sales are flagging amid increased competition for the company's best-selling Advair asthma medication. GSK is trying to establish new respiratory drugs in the U.S. to help replace the lost sales of Advair.

In December, GSK said it would cut 900 jobs in North Carolina, in its commercial and research operations. The drugmaker has about 99,000 employees in 115 countries. Most of its 17,000 U.S. staff are at North Carolina's Research Triangle Park and in Philadelphia.