Pharma Major GSK To Cut 1,200 Jobs in Belgium

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

As part of a three-year plan to save £1.9 billion (US$2.5 billion) in costs, U.K. pharma company GSK is looking to axe up to 1,200 jobs in Belgium.

U.K. drugmaker GSK is planning to cut more than 1,200 jobs in Belgium as part of a three-year restructuring plan.

The High Cost of Restructuring

The company said that the restructuring plan is targeting a £1.9 billion (US$2.5 billion) reduction in costs. Belgium is the heart of the company's global vaccine production operations, and at the end of last year, it employed roughly 8,500 people at its three key sites at Wavre, Rixensart and Gembloux. The plans were presented to workers unions according to Belgian newspaper L'Echo and mainly target office staff and managerial roles. They confirmed that 482 office staff posts and 735 managerial posts are to be cut but factory workers will not be affected. According to Industrial Info Resources data, there are 33 GSK projects worth US$4.15 billion in investment. GSK stated that even after the cuts the company will "remain the largest biopharma employer in Belgium." It added that the country is "an important centre for the company, including as a major hub for vaccines manufacturing, contributing over 50% of GSK's global vaccine operations." The planned cuts come a month after the company announced the planned closure of its Dresden vaccine fill and finish facility in Germany, with the loss of 640 jobs.

Swift Reaction

There was a swift reaction to the proposed cuts by Belgian workers unions, which blocked two of the company's sites at Rixensart and Wavre. Representatives of the FGTB Chemical Workers' Union said the main entrances and all secondary access points were blocked in a 24-hour action. In a statement, it denounced the cuts: "A new restructuring, new worries, and once again, it's the workers who will pay the price for the strategic choices of a multinational that generates billions of euros in revenue worldwide. [There are] alternatives to propose to GSK management in order to minimize the impact of this restructuring on workers." FGTB's chief delegate at GSK added: "The FGTB is completely opposed to this decision by management. We will do everything we can to fight it. Laying off 1,217 workers in a company with 8,300 to 8,400 employees is enormous. It's far too many."

GSK's Reasons

The company gave three key reasons for the proposed cuts when presenting to unions. It will reallocate resources toward the most promising medicine and vaccine candidates while simplifying its organization and working practices through the use of more standardized processes, more digitalization and automation. It also wants the group's global capabilities and external partners to better align capacity with the global demand for certain vaccines. The company said it will still work with leading Belgian universities and research centres but will concentrate its resources on high-priority projects, like its mRNA flu vaccine which is in Phase III testing. 

Importance of Europe's Pharmaceutical Sector

The research-based pharmaceutical industry is one of Europe's leading industrial pillars, employing 955,000 people and supporting approximately three times as many jobs indirectly, both upstream and downstream, according to the European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents the biopharmaceutical industry operating in Europe. However, it is facing a number of key challenges, from regulatory hurdles and rising R&D costs to fiscal austerity measures put in place by many European governments to growing investment competition in R&D from emerging economies such as Brazil, China and India, which is "leading to a gradual migration of economic and research activities from Europe to these fast-growing markets." 

Losing the Race

In September the heads of nine of Europe's leading pharma companies wrote an open letter to European governments calling for action to help reinvigorate investment. The letter, entitled Europe is Losing the Pharma Investment Race -- But the Comeback is Within Reach, was backed by firms including GSK, Novartis, AstraZeneca and Novo Nordisk among others, and called for action to save the future of the sector. "In our boardrooms, we see Europe losing ground to global competition," it read. "Over US$600 billion in pharmaceutical investment has been announced in the U.S. and China in the last two years alone. European governments must create conditions that attract investment in next-generation medicines before it's too late. As Mario Draghi warned [in his EC report: The Future of European Competitiveness], without urgent action, strategic sectors like pharmaceuticals face a 'slow agony' of decline. In 1990, Europe accounted for 43% of global pharmaceutical R&D. Today, it is 31% and falling. Europe's share of commercial clinical trials, which provide vital revenue for public hospitals and improve patient outcomes, has halved in a decade to 9%. China has overtaken Europe in clinical trials, pharmaceutical patents and the development of new medicines."

Key Takeaways

• GSK is planning to cut more than 1,200 jobs in Belgium as part of a 3-year restructuring plan.
• Belgium is the heart of the company's global vaccine production operations, employing roughly 8,500 people.
• According to Industrial Info Resources data, there are 33 GSK projects worth US$4.15 billion in investment.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).