GSK axe begins to fall

By Anna Lewcock

- Last updated on GMT

Related tags Gsk Glaxosmithkline

GlaxoSmithKline (GSK) has been swift in implementing its plant
cuts, already announcing the first sites to be axed mere hours
after revealing its restructuring plans.

GSK unveiled it so-called 'Operational Excellence' programme on Wednesday, cutting sites and streamlining operations to combat falling profits, and by the end of the day had announced that its troubled Cidra, Puerto Rico, plant would be the first to fall to its axe, with news on a number of UK plants fast on its heels.

While GSK has been reluctant to put a number on how many plants or jobs will be lost, and refused to confirm speculation in the UK media that there could be as many as 5,000 job cuts, exchanges between GSK employees on an online blog seem to suggest that sales and marketing could be trimmed by around 1,000 positions.

Puerto Rico The Cidra plant was named as the first manufacturing casualty of GSK's accelerated restructuring efforts, with its 900-strong workforce being cut back to 250 by the end of the year, before being shut down completely by 2010 at the latest.

The plant is currently used to manufacture GSK's Paxil (paroxetine), Coreg (arvedilol) and troubled Avandia (rosiglitazone) and Avandamet (rosiglitazone, metformin) diabetes meds, currently the subject of a review by the US Food and Drug Administration (FDA) regarding adverse cardiovascular side effects associated with the drug.

With the Avandia franchise already hit hard by the negative publicity, it is perhaps telling that a plant responsible for this particular drug's manufacture is one of the first to be closed under GSK's new regime.

As to whether this choice reflected the company's lack of optimism towards re-establishing Avandia in the market following the health scare, a GSK spokesperson asserted that this wasn't the case and that the firm "continues to stand behind Avandia and its benefit when used appropriately."

The Puerto Rico plant had, however, already been the site of good manufacturing practice (GMP) violations between 2002 and 2005, when batches of Avandamet and Paxil were seized following sub-standard product making it onto the market.

The manufacturing issues have since been rectified, and the 250 staff left at the site will continue to manufacture GSK's antidepressant Paxil CR until it can be switched to an alternative site.

A small site in Mexico is also on GSK's hit list according to a company spokesperson, the casualty of the dwindling demand for penicillin products.

UK The first UK sites to be hit by the rapid GSK restructuring also emerged late yesterday.

Two of GSK's 11 UK manufacturing sites have so far been singled out, with 180 jobs to go at the Worthing plant, and another 130 scrapped at a plant in Crawley.

While GSK employees at the Worthing plant were told yesterday that 180 out of the 1,140 workers at the site would be going, the official GSK line is that 60 out of the plant's 900 staff are likely to lose their jobs.

The discrepancy in figures is likely to be down to temporary staff or contractors currently at the site, with the 60 head figure only counting permanent positions.

While the Worthing plant manufactures penicillin based products (declining demand for which factored in the decision to cut jobs) and non-penicillin primary active pharmaceutical ingredients (APIs), the Crawley site is currently used for new product introductions and the production of Coreg CR.

The Worthing cuts will kick off from April next year, due to be complete by 2009, with the Crawley headcount reduction expected to be complete by the end of 2008.

With GSK currently operating 80 sites around the world, all of which could potentially feel the fall-out from the company's Operational Excellence restructuring plans, the company has been quick to start implementing the changes that it hopes will bring savings of £700m by 2010.

While the company says it is still in talks with works councils regarding specific cuts or closures, it seems GSK is throwing itself into action to meet that 2010 deadline and reap the rewards of its restructuring as quickly as possible.

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