January 14, 2008 – Business Management Article
Since its formation in 2001, GlaxoSmithKline (GSK), the pharmaceutical giant, for the first time will run from its London headquarters. GSK will continue to operate from its dual headquarters, in London and Philadelphia. GSK’s CEO, Andrew Witty (who joined Glaxo UK in 1985) has decided to remain in London, partly for family reasons. CEO Witty will travel to the U.S. regularly. It is believed that the highly and increasingly regulated U.S. market offers less lucrative returns for large pharmaceutical firms. Big pharma companies are looking to expand in other regions like the Asia-Pacific region. Perhaps, GSK’s move is indicative of this growing belief which is one of UK’s biggest businesses. GSK UK business is worth about £76 billion.
Despite annual sales of £20 billion and one of the strongest drug pipelines in the industry, GSK is struggling. Sales of GSK’s second biggest selling product Avandia (diabetes drug) collapsed, after the drug was linked to a significantly increased risk of heart attack last year. GSK is also currently undertaking a £1.5 billion cost-cutting drive. This cost-cutting plan includes cutting workforce by at least 5,000 jobs from 102,000, closing a few sites from its 99 sites and outsourcing drug manufacturing partly.