The drug maker released its quarterly earnings Thursday. While it said it's had strong economic performance - boosted in part by sales of swine flu vaccine - it plans restructuring that will include cutting back on its research and development operations worldwide.
Chief executive Andrew Witty told investors the company will stop work on research for new drugs for treating depression and pain and will found a new unit to concentrate on drugs for rare diseases.
GSK is based in London. A newspaper there says the company may eliminate as many 4,000 jobs total across the globe.
"Obviously I don't like to see anybody leave the organization or there to be any job losses. But the reality is that, we do, from time to time, need to look at ways in which we can improve our probability of success. The proposals we're making today are exactly in that theme," Witty told investors.
It’s unclear how many jobs will be cut in Research Triangle Park and any announcement may not come before April. The pharmaceutical giant, which employs 4200 people in RTP, said the massive restructuring worldwide comes even as fourth quarter earnings were up 66 percent.
“This is a sign that things are moving in the right direction,” spokeswoman Mary Anne Rhyne told ABC11. “U.S. sales were down 13 percent in 2009. We lost $2.1 billion to generic drugs last year.”
Those drugs include Valtrex which is used to treat Herpes, Imitrex for migraines, Lamictal for epilepsy and Requip for Restless Leg Syndrome.
In an effort to save the company an additional $780 million a year by 2012, GSK is taking a closer look at sales and administrative costs in addition to research and development.
GSK is spread across 41 buildings in RTP that include 4 million square feet of building space. Half of that space is used for research. With the savings goal announced Thursday, Rhyne said the company will be working over the next few months to streamline operations and determine where cuts should be made.
“The way we do business now, we don’t need all of this space,” Rhyne said.
Rhyne says the 720 GSK employees at its manufacturing plant in Zebulon will likely not be impacted by the restructuring.
Other companies and small businesses could take a hit from any changes at Glaxo. Cheerz Deli, a popular lunch spot depends on “RTPers” for business.
“We have a lot of concern,” owner Marilia Maia said. “Not only for the employees because they have families and it's going to be a burden on their families but also for us. They are our bread.”
Her customers have concerns too. None of the Glaxo employees Eyewitness News spoke with would say anything on the record but employees at other companies supported by Glaxo weren’t as shy.
Brian Moran works for PBM Printing, a company that prints Glaxo’s brochures and kits for different drugs that are sent out to local doctor’s offices.
“We're directly tied to GlaxoSmithKline,” Moran said. “We've had a contract with them for some time one of the largest ones on the East coast. So we are directly affected by what happens at Glaxo.”
When Glaxo had to recall a drug PBM took a hit and had to let some employees go according to Moran.
Business could soon turn around for PBM. GSK just got six FDA approvals on other drugs and has applied for seven more.
Marilia Maia said she’ll stay positive.
“You have to have the faith and keep on going,” she said.