Most GlaxoSmithKline employees in Philadelphia are breathing a sigh of relief after the company announced major job cuts would primarily hit North Carolina.
One employee, wishing to remain anonymous, said workers were informed of the layoffs through a six-minute video by the company’s head of R&D, Patrick Vallance, followed by a town hall meeting where few questions were answered.
Layoffs in Philadelphia are to occur in specific therapeutic areas that will be announced by Monday, the employee said.
In a statement, the company confirmed that North Carolina’s Research Triangle Park will bear the brunt of the cuts, but declined to disclose the number, which is widely estimated to be around 900. Approximately 450 employees in North Carolina will be offered roles in another company, Parexcel.
A GSK spokeswoman, Melinda Stubbee, said some positions from Research Triangle Park will be relocated to Philadelphia, specifically to the Upper Providence site in Collegeville.
George Chressanthis of Temple University’s Fox School of Business said the decision to downsize follows the industry trend of increasing specialization.
“By specializing and focusing your efforts on a few areas,” he explained, “hopefully you can increase the chances of your producing the next novel drug.”
GSK, like most other big pharma companies, he said, is struggling to maintain a pipeline of new drugs as products lose patent protection. With dropping revenues as generic competition increases, companies have less money to pour into R&D, which is made even more difficult and risky when the goal is to find pharmaceuticals that work substantially better than the current low-cost alternatives.
“These cuts are part of a long-term strategic move to reshift its business to specialty areas such as vaccine, HIV, respiratory and so forth,” said Chressanthis.
GSK signaled in its last quarterly earnings report that the company would increase investment in vaccines and drop some of its oncology units, in part through a deal with Novartis.
The layoffs are part of a three-year, $1.6 billion restructuring plan.
GSK has about 1,000 employees at its office in the Philadelphia Navy Yard Corporate Center and more than 3,500 at its two suburban Philadelphia campuses.