GSK and KV Downsize in the Wake of Q4 Numbers

St. Louis-based KV announced Monday that it will cut 700 jobs-about 40 percent of their total workforce-in an effort to get the company back on track after suspending manufacturing and shipment in late January. The company voluntarily recalled its products after reports of oversized pills and faulty manufacturing practices sparked multiple recalls beginning in November 2008.

“KV Pharmaceutical plans to emerge from these challenges on a solid foundation of a smaller, more focused organization and a return to providing excellent products to our customers,” said David Van Vliet, interim president and CEO in a press release. KV expects to rehire some former employees once production and manufacturing resumes.

Meanwhile, pharma giant GlaxoSmithKline announced more layoffs last Thursday as they revealed an updated restructuring program designed to save $2.4 billion annually by 2011. GSK is waiting to disclose exactly how many jobs will be cut until after discussions with employees and trade unions, but analysts say it could be as many as 10,000.

“We are absolutely focused on making sure that we make reductions in areas where we believe we can [without taking] any crazy risks, and then be very open to reinvesting in the areas where we think we've got growth for the future,” CEO Andrew Witty said in an interview that accompanied the fourth quarter sales report.

The announcement came on the tails of a 10 percent net profit loss in the fourth quarter of 2008. Generic competition with key products in the US, deteriorating Avandia (rosiglitazone) sales (40 percent drop in 2008), and pharmaceutical price cuts in Japan hit the company hard last year. Generic infiltration caused fourth quarter sales for three big moneymakers to plummet: Lamictal (lamotrigine), down 68 percent; Wellbutrin XL (bupropion), 43 percent; and Coreg IR (carvedilol), a whopping 93 percent.

Job cuts are part of a larger restructuring plan that GSK leaders hope will wean the company off blockbuster dependence. Breaking into emerging markets, boosting vaccines with more dollars, and creating an attractive small molecule product portfolio are at the top of GSK’s to-do list.

Since the plan was unveiled in November 2007, 10,000 jobs have already been cut, reducing GSK’s global head count to just over 100,000.

While the workforce is slimming down, four acquisitions in the last six months have helped GSK beef up its pipeline and expand into new territory. Sirtris Pharmaceuticals Inc. and Genelabs Technologies added small molecules and Hepatitis C prospects to the pipeline mix, while Bristol-Myers Squibb Egypt and Pakistan tapped emerging markets-one of Witty’s key strategies for 2009. Other prospects on the 2009 horizon include Brazil and India, and further expansion into former hard-to-reach markets in the Middle East.