GSK cuts jobs, pulls HQ out of Phila

Philadelphia is no longer a U.S. headquarters for British drugmaker GlaxoSmithKline P.L.C., the company announced yesterday.

As part of a restructuring that will eliminate 1,800 U.S. sales jobs, GlaxoSmithKline said it would designate its facilities in Research Triangle Park, N.C., as the single operational headquarters for the United States.

The company's global headquarters are in London.

Company spokeswoman Mary Anne Rhyne said the headquarters designation was aimed at eliminating confusion. She said GlaxoSmithKline remained "committed to the Philadelphia community and to Pennsylvania. We've supported communities where our employees live and work, and we'll continue to do that."

GlaxoSmithKline employs about 4,500 people in the region, 1,500 of them in Center City, and 3,000 in Upper Merion and Upper Providence.

Some of the jobs to be cut are already vacant, and some will be shifted from pharmaceutical sales to vaccine sales, so the net reduction will be 1,000. About 7,500 people will work in the sales force after the reductions.

The company has not said how many positions will be lost here or in any other city. Many big pharmaceutical companies, including Merck & Co. Inc. and Wyeth, have reduced jobs to cope with the threat of generic competition and a lack of blockbuster drugs.

Andrew Altman, Philadelphia's commerce director, said he planned to meet Monday with GlaxoSmithKline representatives.

"I think it's premature to say that this is a loss for Philadelphia," Altman said. "They're still maintaining a major presence here."

Mark Schweiker, chief executive officer of the Greater Philadelphia Chamber of Commerce, agreed.

"As far as overall economic activity associated with GlaxoSmithKline, there is little change," he said.

Rhyne said GlaxoSmithKline chief executive Andrew Witty met with employees in Philadelphia yesterday and reassured them that the company believed this area, including the city, "is an important magnet for talent."

Nonetheless, the assertions could not mask the fact that GlaxoSmithKline will no longer have a formal headquarters presence in the city, where it traces its roots back nearly two centuries. In 1830, John K. Smith - the

Smith

in GlaxoSmithKline - opened a Philadelphia drugstore later combined with other companies to eventually become the world's second-biggest drugmaker by sales.

The Philadelphia region is still home to many large and small pharmaceutical operations, but GlaxoSmithKline has been one of the few Big Pharma firms with a local home.

Witty has been trying to overhaul GlaxoSmithKline since he became chief executive earlier this year, succeeding J.P. Garnier, who had an office in Center City and a residence in Devon.

Witty began cutting costs and trying to create a more entrepreneurial approach to research and development to maintain profit.

In an interview in the summer, he said he planned to buy a residence in Philadelphia, and Rhyne said he had done that. She said she believed he would continue to work out of both Philadelphia and North Carolina.

Research Triangle Park won the headquarters designation in part because the company owns its facilities there and leases its Center City building, Rhyne said. In North Carolina, GlaxoSmithKline employs 5,000 people in its 35 buildings.

"The goal was to simplify operations and eliminate confusion," she said. "Having one site designated as headquarters will, for example, make it much easier for our customers to contact us. In the past, people have not been sure whether they should call Philadelphia or RTP for information."

The dual headquarters resulted from mergers that had created GlaxoSmithKline.

GlaxoSmithKline shares closed down $3.23, or 8.04 percent, at $36.96 on a down day across the market.