Glaxo CEO Andrew Witty 'thrilled' with Navy Yard move

Drugmaker GlaxoSmithKline reported lower fourth-quarter profits Wednesday and said it will consider selling two soft drinks popular in the United Kingdom, but chief executive officer Andrew Witty said he was "thrilled" with the early feedback from Philadelphia employees moving from near Logan Square to a new facility at the Navy Yard.

"Even some of the diehard skeptics are impressed with how things are going," Witty said during a news conference in London to discuss 2012 full-year and fourth-quarter results. "I was pleased to hear that people were actually talking to other people. You can't just go into your office and hide."

In the Navy Yard facility, Glaxo is dispensing with almost all offices and cubicles. There are a few rooms with doors for use when there is a distinct need for a separate meeting. But mostly, employees have a cabinet to store belongings. When they arrive for work, they connect their phone and computer to jacks and plugs at tables and start working.

The Inquirer had stories in Sunday's paper on the overall expansion of business in the Navy Yard (here) and another on the ergonomic aspects of working in that kind of setting (here).

Glaxo is based in London. The company is renting near Logan Square and will vacate that space once the move to the Navy Yard is complete. Glaxo also has facilities in the Pennsylvania towns of Upper Merion, Upper Providence, Conshohocken, Marietta and Pittsburgh, along with New Jersey locations of Clifton and Parsippany.

The company said its 2012 fourth-quarter profit was $1.3 billion, which was down from $2 billion in same period in 2011. The 2012 full-year profit was $7.43 billion, which was a decline from $8.55 billion in 2011.

The company and Witty explained that there will be cost cuts made to operations, mainly in continental Europe. That region has the had the greatest revenue declines due in part to government prices pressures, and Witty said he did not expect that to change.

The big news for consumers in the UK was that Glaxo said it will explore options for soft drinks Lucozade and Ribena, which are not sold in the United States and only recently began to be distributed in India and China. Witty said the non-UK manufacturing and distribution of those products doesn't fit as smoothly with Glaxo's core group of prescription and over-the-counter products, so a sale of those brands would be an option.

One of the other ways that the company hopes to save an additional $1 billion per year by 2016 is with greater use of enzyme technology in the production of medicine. He estimated that one third of the company's research is "amenable" to this process. Boiling down the science, Witty said the enzymes will do the work of heat and pressure in part of the production chain, thereby reducing the need for solvents and big factories.

"This is like going from oil refineries to classrooms," Witty said of the space issue.

The enzyme emphasis will involve some of the Philadelphia-area research facilities.

"We've made a significant commitment to Philadelphia and the Delaware Valley," Witty said. "Some of the R&D facilities will benefit from what we've talked about today. How that affects our footprint, we'll have to see."

Glaxo said it filed applications for regulatory approval for six drugs in 2012 and Witty was hopeful about the pipeline's prospects. He said that the reorganization of Glaxo's U.S. commercial operations in the last couple years has put the company in a good "jumping off position," to sell those medicines after approval.