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GlaxoSmithKline Trimming US Sales Force by 1,000

GlaxoSmithKline, the world's second-biggest drugmaker, is cutting approximately 1,000 U.S. sales jobs by the end of 2008 as it reorganises the operation to compete in an increasingly tough market.

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AP

The move, which amounts to a reduction of around 12 percent, will reduce the number of sales representatives employed by Glaxo in the United States to around 7,500 from 8,500, a company spokesman said on Wednesday.

The reductions, however, will not be made across the board.

While representatives dealing with primary-care products will feel the brunt of the cutbacks, the British-based company is planning to add jobs in vaccines and specialty pharmaceuticals, including oncology.

"Meetings are going on today to announce the start of activities around reshaping the U.S. pharmaceutical business," the spokesman said.

He said the goal was to ensure the company's sales force was in line with Glaxo's current and future portfolio, noting further job reductions could not be ruled out. "The process for reshaping this business is ongoing," he said.

Like many drugmakers, Glaxo is losing sales of older products to generic competition but hopes to make up for this by increasing revenues in new areas, including vaccines and cancer drugs.

Radical Rethink

The move to cut jobs had been expected after Chief Executive Andrew Witty said last month he was looking at all aspects of Glaxo's U.S. operations, including the sales team. Glaxo said on Tuesday an announcement was imminent.

In the United States, the world's most profitable market for prescription drugs, the changing environment is forcing all drug company executives to rethink radically the way they do business.

Witty told analysts in a third-quarter results call last month the market was "in a pretty fundamental phase of transition."

Many analysts believe pressures on drug company profits will only increase, especially with a new Democrat administration likely to push for lower prices as its seeks to extend healthcare coverage in the United States.

Drug companies worldwide have eliminated thousands of jobs in the past two years as a lack of significant new drugs, declining sales of lucrative flagship franchises and fierce competition have cut into profits.

Merck, for example, last month announced it was axing 12 percent of its workforce, or 7,200 posts, in addition to 10,400 jobs slashed in an earlier restructuring.

Pfizer and Bristol-Myers Squibb are among other leading companies to have cut their tally of sales representatives significantly.