The beleaguered drugs giant GlaxoSmithKline is set to wield the axe on hundreds of jobs this week under plans to save £1bn over the next three years.
The bulk of the cuts are likely to come in the US, where sales of its biggest-selling drug – the asthma treatment Advair – are tumbling amid tough competition from rivals. US healthcare insurers are also driving a much harder bargain over the price of treatments, forcing drugs companies to look closely at cost-cutting to defend margins.
The UK’s biggest drugs maker signalled the cost-cutting round in October’s third-quarter results, but will spell out where the axe will fall on Wednesday, according to reports.
It comes after a torrid autumn for Glaxo in which it was hit with a record $489m (£304m) fine for corruption in China. Several executives were given suspended jail sentences.
The group is also looking into alleged bribery in several countries including the United Arab Emirates, Lebanon, Jordan, Syria and Iraq, as well as Poland.
A GSK spokesman said the aim of the restructuring was to improve performance by reducing complexity and cutting costs. “Each business unit is deciding how to respond to this challenge. When we do have proposals, we will first share those with our employees,” he said.
Alongside falling sales of Advair, Glaxo’s newer lung drugs Breo and Anoro are proving slow to take off.
Meanwhile US insurers – themselves under pressure to keep premiums in check – are pushing back particularly hard on prices for medicines in areas like diabetes and respiratory diseases, where there are multiple options for doctors and patients.
The French drugmaker Sanofi has reported similar pressures from US insurers in the diabetes market.
The overhaul has also been prompted by Glaxo’s asset swap deal with Switzerland’s Novartis, which is taking over GSK’s cancer treatment business.Reuse content