GlaxoSmithKline (NYSE:GSK) layoffs in its U.S. neurosciences group are affecting less than 50 workers but half of those job cuts are coming from the pharmaceutical company’s U.S. headquarters in Research Triangle Park, North Carolina.
London-based GSK confirmed the layoffs Wednesday. The affected workers were informed on Feb. 14. Initially, GSK declined to specify where the job cuts were happening or disclose how many workers were affected. But the company later disclosed additional details specifying that the layoffs are in the Neurosciences Medicine Center in R&D. Spokeswoman Kathy Pitman said the affected positions are research and development jobs doing late stage clinical trial work. Other neuroscience work, such as sales and marketing, are not affected.
Beyond the cuts in RTP, where GSK employs about 4,000, the layoffs are spread throughout the company’s clinical trial sites in the United States. GSK also maintains a large presence in Philadelphia. No GSK operations outside of the United States were affected by this round of layoffs.
Pitman said the affected employees work on neuroscience compounds in later stage clinical trials. This round of layoffs comes as the company faces the realization that paring back on earlier stage research leaves the company with fewer compounds that need work further down the pipeline.
“We scaled back on early stage research, which means there’s not as much coming through that needs later stage clinical trials,” Pitman said.
Last year, after GSK released fiscal 2009 results, the company also announced it would “cease discovery research in selected neuroscience areas, including depression and pain.” The announcement accompanied an expansion of GSK’s restructuring program by reducing R&D infrastructure costs in an effort to reach $785 million in savings by 2012. GSK offered no projections of job cuts. After GSK’s announcement, Reuters reported that the cuts were expected to result in 3,000 lost jobs worldwide. GSK’s U.S. headcount is about 17,500.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The layoffs follow quarterly results that saw GSK take a $1.12 billion loss in the fourth quarter of 2010, which the company attributed primarily to legal costs related to embattled diabetes drug Avandia. The former blockbuster drug is now the focus of thousands of lawsuits alleging it caused or contributed to cardiac events in patients. But the company is also losing sales to generic competitors of herpes drug Valtrex and asthma product Advair. As sales of those former top sellers succumb to rising generic competition, GSK has seen fewer candidates emerge through the pipeline to replace the revenue that those drugs generated.
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