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GSK Restructuring Slashes R&D; RTP to Take Brunt of Cuts

Xconomy Raleigh-Durham — 

The contingent of researchers in North Carolina’s Research Triangle Park is set to get smaller as Britain-based GlaxoSmithKline (NYSE: GSK), one of the Park’s largest tenants, consolidates R&D operations. The move is part of a corporate restructuring that will eliminate some 900 research positions in the Park alone.

GSK announced details of the restructuring and layoffs to employees on Wednesday. R&D operations will be consolidated in the company’s Philadelphia, PA, hub as well as at Stevenage in the United Kingdom. In a statement, the company says it is “reshaping and reducing” its U.S. commercial and R&D workforce of 17,000 to adjust to “shifting market demands.” Job cuts will affect GSK sites in Philadelphia and RTP, as well as employees out in the field. But the company says it will retain sales staff working on the launch of new medicines to the market.

The RTP site, which has 4,500 employees and contractors, including 2,500 in R&D, will take the brunt of the layoffs. GSK did not initially disclose how many jobs would be cut but in a letter faxed to North Carolina workforce officials—federal law requires notification in instances of mass layoffs—GSK says approximately 350 RTP jobs will be eliminated in the first quarter of 2015, and 450 will be cut in the second quarter. Another 100 RTP positions will be cut by the end of 2015. Positions eliminated include chemists, engineers, biologists, clinical development scientists, and statisticians, among others.

GlaxoSmithKline formed in 2000 through the merger of Glaxo Wellcome and SmithKline Beechum but GSK’s research legacy in the Park goes much deeper. Glaxo Inc. had been in the Park since 1983. Burroughs Wellcome, which merged with Glaxo in 1995 to form Glaxo Wellcome, was in the Park even longer, dating to the 1972 opening of a headquarters designed by architect Paul Rudolph. Those buildings still stand in RTP but they had become an example of GSK’s shrinking presence there. GSK sold the former Burroughs Wellcome buildings to United Therapeutics (NASDAQ: UTHR) in 2012. In recent years, GSK has also been exiting leased space in the Triangle as it consolidated operations in the remaining space it owns in the Park. GSK foreshadowed layoffs in October when it released third quarter financial results and announced a plan to cut $1.6 billion in costs within the next three years.

“The aim of the program is to improve performance by taking unnecessary complexity out of our global operations and establish a smaller, more focused organization operating at lower costs to support our future portfolio,” Stephen Burr, a GSK senior vice president for human resources said in the Wednesday letter to state officials.

Burr qualified the job cut estimates by saying that some workers will be offered the chance to relocate to other GSK locations. The company adds that as many as 450 employees will be offered positions with a “Research Triangle based GSK supplier”—the contract research organization Parexel (NASDAQ: PRXL). GSK later explained that it has signed a letter of intent with Parexel to create a “dedicated GSK business unit within Parexel.” GSK says that unit will provide a variety of clinical development services and be based in the RTP area. The companies had already been working together; in 2010 GSK selected Parexel to provide a range of clinical development and trial services.

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