News & Observer | newsobserver.com | Scientists taking brunt of GSK cuts

Published: Oct 01, 2008 12:30 AM
Modified: Oct 01, 2008 05:46 AM

Scientists taking brunt of GSK cuts

In U.S. and U.K., 850 positions will be eliminated as the company trims research and development

 

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GlaxoSmithKline's plan to reshape its research-and-development efforts calls for the elimination of 850 positions in the United Kingdom and U.S., including an undisclosed number of employees in Research Triangle Park.

A majority of the cuts planned by the British pharmaceutical giant involve scientists -- the third time this year that GSK has cut scientists. Administrative staff also will be affected, spokeswoman Melinda Stubbee said.

RTP workers were notified of the job cuts Tuesday, but some employees could remain with the company for weeks or even months, Stubbee said.

An undetermined number of the positions that the company expects to cut are vacant.

GSK has about 5,500 workers in the Triangle; 900 are at a manufacturing plant in Zebulon.

The cuts are part of a continuing effort, announced in October 2007, to save $1.4 billion a year over the next three years. Since then, GSK has laid off more than 200 workers in the Triangle and more than 1,500 in the U.S. and Puerto Rico.

"GSK, along with all of the large pharmaceutical companies, is looking for ways to lower costs and improve efficiencies across the board," said analyst Linda Bannister of Edward Jones in St. Louis.

"One area of lackluster return has been in the research and development area, where pharmaceutical companies, including GSK, are getting less than $1 in return for every dollar invested. That's not a sustainable business model."

In that context, Bannister said, GSK CEO Andrew Witty "is making the tough decisions necessary in order to position GSK for long-term growth."

GSK and other drug companies have been buffeted by competition from generic drugmakers, increased scrutiny from regulators and limited success in developing medicines.

Although it's inevitably a difficult time for workers when a company is cutting back, it's especially frustrating for researchers at GSK right now because "it never feels like it's a finished process," said Stephen Frye, GSK's former head of worldwide drug discovery and now a faculty member at UNC-Chapel Hill. "They've had two years of constant reorganization of the same group."

In mid-June, GSK eliminated about 250 scientists that were based in RTP and Philadelphia. The company also eliminated 22 chemists' jobs in August.

"When nothing feels stable, I think it's a really challenging environment," Frye said.

Still, he added, "I don't want to come across as critical of GSK. I think they're struggling to adapt to a different, new world."

Dick Kouri, executive director of biosciences management at N.C. State University, said the latest job cuts could spur the formation of startup companies.

"I think this is a great opportunity for those individuals to be entrepreneurs, to think entrepreneurially," he said.

The cutbacks are focused on preclinical research and early-stage drug development and are part of a "reshaping" of the company's research-and-development effort, Stubbee said.

The new paradigm will include "smaller, more tightly focused teams" and increased collaboration with smaller biopharmaceutical companies and universities, she said.

"We don't think we have the market on good science, and so we're also looking outside," Stubbee said.

The cutbacks don't affect RTP's status as one of GSK's two U.S. headquarters, Stubbee said.

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Staff writer Alan M. Wolf contributed to this report.
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