GSK plans layoffs of 350
Sabine Vollmer, Staff Writer
GlaxoSmithKline confirmed Wednesday it is laying off 350 of its about 15,000 researchers -- a chunk of them in Research Triangle Park.
It is the third round of layoffs since GSK started a three-year restructuring program to counter slowing sales six months ago. It takes a bite out of GSK's drug discovery engine, a key asset for any pharmaceutical company. And further cuts are likely.
"For sure," Dick Kouri, executive director of biosciences management at N.C. State University, said when asked whether GSK will cut more jobs in the next two-and-a-half years.
"There's no other way," Kouri said.
Jean-Pierre Garnier, GSK's chief executive until his retirement last month, wrote in the May issue of the Harvard Business Review that size has become an impediment.
Like other large drug makers, GSK faces tremendous challenges.
To shepherd a new drug from lab bench to pharmacy shelves can cost more than sending a rocket to the moon. While annual spending on research and development rose more than 20-fold, the number of new drugs that received regulatory approval in 2006 was roughly the same as in 1980.
Saddled with skyrocketing expenses and not much to show for it, large drug makers are ill-prepared to face the onslaught of generic competition that is looming. By 2012, drugs that generated about half of their 2007 sales will lose patent protection.
GSK, which now employs about 4,700 at its U.S. headquarters in Research Triangle Park, has also lost about $2.5 billion in sales since May 2007. That was when a study linked its best selling diabetes pill Avandia to increased risk of heart attack.
The restructuring program, which aims to save as much as $1.4 billion annually over three years, was initiated on Garnier's watch.
In the Harvard Business Review, he argued that the industry is organized according to a 1960s model that is in need of sweeping changes, particularly in research and development, where the science has become more complex over time and leadership skills have been neglected.
"Complexity and the leadership void have given rise to teams that focus too much on process and too little on producing meaningful results, and have allowed sleepwalkers and nine-to-fivers to hide," Garnier wrote.
GSK has already planted a lot of seeds, he wrote, "but the flowers have yet to bloom."
His successor, Andrew Witty, has pledged to boost GSK's investment in new drugs discovered outside the company.
GSK declined to release details about the latest job cuts.
But a good number were expected to affect GSK's research and development center in RTP.
GSK employs about 500 scientists at the RTP center and a similar center in Philadelphia. About half of those jobs were projected to be on the line.
The two centers are involved in finding treatments for cardiovascular and metabolic diseases, including diabetes.
Layoffs often serve as wake-up calls for the remaining researchers to do a better job, said Atul Nerkar, a professor at the University of North Carolina at Chapel Hill. Nerkar studies strategies that drug makers pursue to improve research and development.
The pharmaceutical industry has long acknowledged the waste in its research and development spending, Nerkar said.
About 25 percent of the patents drug makers file for new discoveries lapse for lack of maintenance.
"They're giving them up, because the ideas are worthless," he said.
sabine.vollmer@newsobserver.com or (919) 829-8992
GlaxoSmithKline confirmed Wednesday it is laying off 350 of its about 15,000 researchers -- a chunk of them in Research Triangle Park.
It is the third round of layoffs since GSK started a three-year restructuring program to counter slowing sales six months ago. It takes a bite out of GSK's drug discovery engine, a key asset for any pharmaceutical company. And further cuts are likely.
"For sure," Dick Kouri, executive director of biosciences management at N.C. State University, said when asked whether GSK will cut more jobs in the next two-and-a-half years.
"There's no other way," Kouri said.
Jean-Pierre Garnier, GSK's chief executive until his retirement last month, wrote in the May issue of the Harvard Business Review that size has become an impediment.
Like other large drug makers, GSK faces tremendous challenges.
To shepherd a new drug from lab bench to pharmacy shelves can cost more than sending a rocket to the moon. While annual spending on research and development rose more than 20-fold, the number of new drugs that received regulatory approval in 2006 was roughly the same as in 1980.
Saddled with skyrocketing expenses and not much to show for it, large drug makers are ill-prepared to face the onslaught of generic competition that is looming. By 2012, drugs that generated about half of their 2007 sales will lose patent protection.
GSK, which now employs about 4,700 at its U.S. headquarters in Research Triangle Park, has also lost about $2.5 billion in sales since May 2007. That was when a study linked its best selling diabetes pill Avandia to increased risk of heart attack.
The restructuring program, which aims to save as much as $1.4 billion annually over three years, was initiated on Garnier's watch.
In the Harvard Business Review, he argued that the industry is organized according to a 1960s model that is in need of sweeping changes, particularly in research and development, where the science has become more complex over time and leadership skills have been neglected.
"Complexity and the leadership void have given rise to teams that focus too much on process and too little on producing meaningful results, and have allowed sleepwalkers and nine-to-fivers to hide," Garnier wrote.
GSK has already planted a lot of seeds, he wrote, "but the flowers have yet to bloom."
His successor, Andrew Witty, has pledged to boost GSK's investment in new drugs discovered outside the company.
GSK declined to release details about the latest job cuts.
But a good number were expected to affect GSK's research and development center in RTP.
GSK employs about 500 scientists at the RTP center and a similar center in Philadelphia. About half of those jobs were projected to be on the line.
The two centers are involved in finding treatments for cardiovascular and metabolic diseases, including diabetes.
Layoffs often serve as wake-up calls for the remaining researchers to do a better job, said Atul Nerkar, a professor at the University of North Carolina at Chapel Hill. Nerkar studies strategies that drug makers pursue to improve research and development.
The pharmaceutical industry has long acknowledged the waste in its research and development spending, Nerkar said.
About 25 percent of the patents drug makers file for new discoveries lapse for lack of maintenance.
"They're giving them up, because the ideas are worthless," he said.
sabine.vollmer@newsobserver.com or (919) 829-8992
Labels: Glaxo, layoffs, North Carolina, RTP
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