Glaxo Continues to Remain Tight-lipped About Looming Job Cuts
Many people, most notably GlaxoSmithKline employees, assumed that GSK management would disclose at its earning call yesterday how many people would lose their jobs in the company’s next round of job cuts announced earlier this week. Surprisingly, management decided not to announce the breadth and depth of layoffs ostensibly increasing the drama and anxiety of its employees about the cuts.
Management’s decision not to disclose the number of employees who would lose their jobs after publicly announced that it would cut up to 4,000 jobs means one of two things according to Jim Edwards of the BNET blog.
“Either that GSK itself has not finished calculating it; or that management believes there’s some sort of PR advantage to not actually saying out loud what everyone already knows.”
Based on public statements made by GSK spokespeople, Edwards has identified several vulnerable areas where jobs are likely to be cut. These include R&D across the board and one therapeutic area, neuroscience. According to bloggers and insiders who leaked information to the public, the asthma drug Advair may be at risk, as well as metabolic disease product development and sales representatives. Also, there will be reporting structure changes and less emphasis will be place on new product launches in the US. The recent decision to not seek US regulatory approval for GSK’s new, pneumococcal vaccine Synflorix, despite garnering EU approval tends to substantiate this idea.
Elimination of neuroscience as a therapeutic area of interest for GSK was clearly enunciated when the company mentioned during the earnings call
“Today, we have announced proposals to cease discovery research in selected neuroscience areas, including depression and pain.”
Today, GSK announced that it would close a research center in Verona Italy that specializes in neuroscience research. Approximately 500 workers will lose their jobs after the facility is closed. Unions representing the Italian workers also disclosed in an e-mail message that six facilities worldwide besides Verona will also be closed by GSK.
Less obvious, but clearly written between the lines was the statement made about R&D.
"We have ‘externalised’ approximately 30% of GSK’s discovery research. We are already conducting discovery research with 47 external partners. Our goal is to further increase the level of externally sourced compounds in our pipeline …"
"… We are also looking to reduce R&D infrastructure costs."
Perhaps what may be most troubling to GSK employees who ultimately lose their jobs is the $900 million or more spent on legal fees over the past year. GSK didn’t disclose why the company had incurred such enormous legal bills.
The recent spate of layouts doesn’t mean that any big pharma companies are in financial trouble. As previously mentioned, most of the layoffs are based on future economic predictions and projections which may or may not be realized. Companies are cutting staff and implementing cost savings measures simply to bolster their stock prices and give investors their expected ROI. The economic downturn has provided pharma companies with excellent cover to downsize at will without anybody asking any tough questions. While I feel the pain of workers who have either lost or soon will lose their jobs, the downsizing taking place over the past three years has been a long time in the making. I suspect that many well paid veteran employees turned a blind eye to the internal changes and cues that may have signaled their ultimate demise.
While downsizing will likely have its anticipated short term effects i.e. bolster flagging stock share prices, it will ultimately hurt the future economic prospects of most big pharma companies. This is because pharma companies will lose many of the talented and experienced workers whose previous hard work and sacrifices contributed to their past successes. When are the overpaid pharma executives going to realize that it is the rank and file, not them that bring creativity, innovation and ultimately financial rewards to their stakeholders?
Until next time...
Good Luck and Good Job Hunting!!!!!!!!!
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Mark Sendak, author of the incisive .jpg)
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