GlaxoSmithKline: Look Who's Not Getting Laid Off
GlaxoSmithKline will ax 6,000 more jobs. The move has been expected for some time (See BNET’s note on Nov. 4.)
But not everyone will be losing their jobs at GSK. Here’s a look at who’s career won’t be ruined by the coming round of cuts; followed by a brief note on what to expect in GSK’s upcoming Q4 earnings announcement.
- Media mogul Rupert* James Murdoch got a new job at GSK: He was just made a non-executive director. The directorship comes with £75,000.
- Lawyers and state prosecutors are doing well at GSK right now: The company recently announced it was setting aside $400 million to pay off an investigation into the marketing of “several products” in Colorado: “GlaxoSmithKline plc (GSK) today announced that it will record a legal charge in the fourth quarter of 2008 of $400 million (£278 million) relating to an ongoing investigation initiated by the US Attorney’s Office in Colorado into the Group’s US marketing and promotional practices for several products for the period 1997 to 2004. This charge is in addition to legal charges for other matters to be taken in the fourth quarter.”
- Celebrities and television networks: GSK just hired Wynnona Judd to tout its diet drug, Alli, and you’ve probably seen the TV commercials recently. They’re on fairly frequent rotation. It’s an interesting strategy for a drug that makes only abouyt $120 million a year in revenues.
- Executives at Actelion are still rolling around in the $3.3 billion GSK has agreed to pay the company for a sleeping pill: The deal was made even though the insomnia market is riddled with generics and no branded pill currently earns anywhere close to that kind of money. One concludes that the Actelion pill is the best sleeping pill ever.
- Lobbyists are still getting rich: GSK spent $2 million went on Washington lobbyists in Q3.
- Politicians also do well with GSK: The company gave $1 million to its PAC.
The layoffs will fall more heavily in the UK:
Although cuts would be made across GSK’s international operations, the spokesman said that it employed “disproportionately a higher number [of people] in the UK … The UK represents 20 per cent of our 100,000-strong global workforce, but less than 10 per cent of sales,” he said.
All GSK employees might want to note that this is confirmation of an issue that BNET has been covering for some months now: the link between sales, general and admin expenses and the revenues they generate. Last quarter, GSK got $3.54 in revenues from every dollar it spent on sales and admin. That number was trending up from a recent low of $3.08.
The layoffs suggest that trend is threatened either by rising costs or falling revenues. The company will reveal the answer at its upcoming Q4 revenue call.
- See BNET’s previous coverage of GlaxoSmithKline:
- GSK Signs Wynonna Judd to Endorse Alli, Its Flagging Weight Loss Drug
- Is GSK’s Top R&D Deal Linked to Its “Undisclosed” FDA Application?
- GSK to Stop Political Donations … Or Not
- GlaxoSmithKline Employees Fume Over Latest Round of Layoffs
Image: GSK CEO Andrew Witty
* D’oh! I coulda sworn this said Rupert!
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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