Global drugmaker GlaxoSmithKline took a 5 percent hit on sales in the fourth quarter, driven by a 10 percent decline in the United States, as the company closed out one of the most challenging years in its recent history.
GSK, one of the Triangle’s largest employers, issued earnings Wednesday, just two months after announcing it would eliminate 900 jobs in North Carolina this year as part of a $1.6 billion cost-cutting strategy.
The British company has experienced disappointing performance in the face of intense global competition and cheaper generic drugs, among other factors shaking up the pharmaceutical industry.
Sales fell to $9.9 billion in the fourth quarter of 2014. Operating profit declined to $1.1 billion, 1 percent off from the same period a year earlier. Revenue for the full year was down 4 percent.
In the United States, sales of pharmaceuticals fell 10 percent, and vaccines were down 9 percent. Revenue from asthma inhaler Advair, for years GSK’s lead product, fell 27 percent owing to a combination of declining sales and lower prices per unit.
The company’s strategy involves creating a new suite of respiratory products that can replace Advair.
“The reality is that, as we go through the next few years, Advair will become in the U.S. a smaller and smaller proportion of the (respiratory) group,” GSK CEO Andrew Witty said on a conference call with analysts. “The success for us is not simply to grow a product which will replace Advair with a new product; it has been to grow a portfolio to replace Advair, and I believe that we are on track for that.”
Witty said the “headwinds” will continue in 2015 as the company is trying to compensate by creating new respiratory medications.
“It’s a supercompetitive space both in Europe and in America, but we increasingly are feeling confident that after a slow start, we are beginning to get these new products entrenched,” he said.
GSK employs about 5,000 in the Triangle – 4,500 at its North American headquarters in Research Triangle Park and 500 at its manufacturing facility in Zebulon – but the number could be dramatically different by the end of this year.
Under its restructuring plan, GSK will shrink its R&D operations and its pharmaceutical business in the United States. About half of the affected employees in Research Triangle Park will be offered positions with a clinical research company, Parexel, and an undetermined number will be able to relocate to GSK’s campus in the Philadelphia area.
At the same time, GSK will absorb Novartis vaccines workers as part of a business swap in which Novartis will buy GSK’s oncology division.
Oncology products boosted GSK in the fourth quarter, gaining 45 percent in sales in the United States. However, oncology accounted for only about 6.5 percent of GSK’s global business last year.
GSK has been spinning off or selling noncore business units and refocusing on its most promising product areas: vaccines, consumer products and select pharmaceuticals, such as respiratory and HIV.
GSK’s stock closed Wednesday at $44.95, down 69 cents. The shares are down 11 percent over the past year.