GlaxoSmithKline will make Research Triangle Park its sole U.S. headquarters and cut almost 2,000 sales jobs, the company said recently. The move eliminates the dual headquarters that London-based GSK has had in the U.S. since the 2000 merger that created GSK. Company spokeswoman Mary Anne Rhyne says the move makes sense in the midst of a major restructuring for GSK, “The announcements today are all aimed at streamlining the organization, and simplifying the business model.” RTP was picked over its Philadelphia office in part because the company has a bigger footprint here. The company has about 5,000 workers in RTP and owns 35 buildings on that campus. Rhyne says GSK also expects its new head of U.S. pharmaceuticals to be based in RTP.
Chris Coletta of the Triangle Business Journal filed the following story.
GlaxoSmithKline will make Research Triangle Park its sole U.S. headquarters and cut almost 2,000 sales jobs, the company said Wednesday. The move eliminates the dual headquarters that London-based GlaxoSmithKline (NYSE: GSK) has had in the U.S. since the 2000 merger that created GSK. Since that deal, which combined Glaxo Wellcome with SmithKline Beecham, GSK has had one U.S. headquarters in RTP – the home base of Glaxo Wellcome – and another in Philadelphia, former home of SmithKline Beecham’s American headquarters.Company spokeswoman Mary Anne Rhyne says the move makes sense in the midst of a major restructuring for GSK, which is tweaking its business model and cutting jobs worldwide in the face of increased competition from generic medicines and a slowing drug pipeline.“The announcements today are all aimed at streamlining the organization, basically,” she says. “Simplifying the business model. And we realize that having both RTP and Philadelphia designated as operational headquarters for the U.S. was confusing to many people.”A simple example, Rhyne says: Customers who wanted to call GSK operations weren’t always sure whether they should phone Philadelphia or Raleigh. Now, they’ll have a better idea.RTP was picked over Philadelphia in part because the company has a bigger footprint here, Rhyne says. The company has about 5,000 workers in RTP and owns 35 buildings on that campus. In Philadelphia, the employee base is about 1,500, and GSK leases real estate.Rhyne says GSK also expects its new head of U.S. pharmaceuticals to be based in RTP. Chris Viehbacher, who formerly held that job for GSK before leaving to take the chief executive post at Sanofi-Aventis, also worked out of the Triangle.The headquarters move also coincides with the rise of Glaxo Wellcome veteran Andrew Witty to chief executive of GSK. Former CEO J.P. Garnier was a SmithKline Beecham man.Rhyne says she’s not sure what the practical implications of the headquarters move might be. The company has no plans to abandon Philadelphia, she says.“What does it really mean? I don’t think we know yet,” she says. “This is the first bit of restructuring. There’s more to come. We don’t really know what the complete package will be.”GSK has cut hundreds of jobs in the Triangle and thousands worldwide since announcing, in October 2007, a $1.4 billion cost-cutting program. Local job cuts have included administrative, scientific and sales workers in Research Triangle Park as well as manufacturing workers at GSK’s plant in Zebulon, where about 900 are still employed.
That restructuring continued Wednesday, when Glaxo said that it will cut 1,800 positions from its sales force – a move that includes 1,000 layoffs.The company isn’t breaking down the layoffs by region.The cuts are part of an overall rethinking of how GSK sells its medicines. Witty, the new CEO, has said that the pharmaceutical industry is seeing diminished returns from its current model of visiting doctors frequently to hawk drugs. Between ever-increasing patient workloads and the increasing prevalence of generic medicine, Witty says, doctors simply don’t have time for the “ultra-high-frequency” model of selling.Now, Rhyne says, the company’s goal is to have “a smaller number of sales reps with broader information.” Sales teams will be broken down by therapeutic areas instead of geographic locations. That means reps who now sell a smorgasbord of different drugs will instead be knowledgeable in a wide range of drugs in one area – respiratory disease, for example, or cancer.“We’ve got the marketplace changing,” Rhyne says. “Our customers are changing. The health care professionals don’t want to see as many sales reps, but they do need detailed information.”Sales representatives in different areas will work on the same therapeutic areas, but they’ll all report to one person, Rhyne says: the new head of U.S. pharmaceuticals. Witty has said he doesn’t expect to hire someone for that position before the first quarter of 2009.In the meantime, two Glaxo veterans – one in RTP, the other in Philadelphia – are running the U.S. pharmaceutical organization.
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