GSK Announces Restructuring of Belgian Vaccine Business with 720 Job Cuts

Compiled by Fan Dongdong

GlaxoSmithKline’s (GSK) vaccines division has long been one of the company’s core profit centers. However, recent performance in this business unit appears insufficient to shield it from layoffs.

This Wednesday (February 6), GSK has begun implementing a two-year restructuring plan at its Belgian vaccine division, which will result in the layoff of 720 employees. The workforce adjustments will affect staff in research and development, manufacturing, and global support functions. Additionally, GSK has decided not to renew the temporary labor contracts of 215 employees.

GSK employs 9,000 people in Belgium and is one of the country’s largest pharmaceutical employers. Nevertheless, despite the current large-scale layoffs, GSK still plans to invest €500 million (approximately RMB 3.8 billion) over the next three years in research and development, manufacturing, and other technologies to support the development of new vaccines. The company aims to enhance automation in vaccine production to increase capacity.

GSK stated that the purpose of this personnel adjustment is to enhance the company’s efficiency and establish a “unified approach” to research and development across both pharmaceuticals and vaccines, thereby helping the pharmaceutical manufacturer determine which drug candidates represent the optimal strategic choices for advancement.

Meanwhile, GSK also announced its 2019 annual results, with the vaccine business delivering impressive revenue performance. At constant exchange rates, the Vaccines division achieved a growth rate of 19% last year, while the Consumer Healthcare division grew by 17%, and pharmaceutical sales remained flat compared to 2018. Furthermore, the vaccine business recorded an operating margin of 41.4%, outperforming other business segments.

Over the past year, the strength of GSK’s shingles vaccine, Shingrix, within its vaccine business has been significant, with the product achieving sales of £1.8 billion (RMB 16.2 billion) in 2019. However, its growth has been hindered by supply constraints. GSK is committed to gradually improving the supply of Shingrix and expects to bring a new production facility online in 2024.

In addition, GSK’s meningitis vaccine sales grew by 15% last year, reaching £1 billion (approximately RMB 11.7 billion). Among other products in its pipeline, the company’s vaccines for chronic obstructive pulmonary disease (COPD) and respiratory syncytial virus (RSV) are also expected to yield positive trial results.

As it restructures and downsizes its vaccine business, GSK has also begun preparing for the large-scale demerger of its consumer healthcare division. The company expects the entire demerger process to cost £2.4 billion, including £1.6 billion in cash. Through the spin-off, GSK aims to achieve annual savings of £700 million by 2022 and improve operational performance from 2022 onwards.

Reference Source: GSK cutting 720 jobs in manufacturing, R&D and support functions at massive Belgian vaccine hub