Glaxo's chief 'thrilled' at reaction to move to Navy Yard

GlaxoSmithKline reported lower fourth-quarter profits Wednesday and said it would consider selling off two soft-drink brands popular in the United Kingdom, but chief executive officer Andrew Witty said he was "thrilled" with the early feedback received 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."

At the Navy Yard, 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 separate meetings, but when employees arrive for work, they connect their phones and computers to jacks and plugs at tables and start working.

London-based Glaxo has been renting at Franklin Plaza near Logan Square and will vacate that space after completing the move to the Navy Yard. It also has facilities in Upper Merion, Upper Providence, Conshohocken, Pittsburgh, and Marietta, Pa., and in Clifton and Parsippany, N.J.

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

Witty said there would be cost cuts made to operations, mainly in continental Europe, which has had the greatest revenue declines, due, in part, to government price pressures - something he noted he did not expect to change.

Glaxo said it will explore options, including a sale, for soft-drink brands 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-U.K. manufacturing and distribution of those products doesn't fit as smoothly as others - including some sports drinks - do with Glaxo's core prescription and over-the-counter brands.

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

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 prospects. Reorganization of U.S. commercial operations in the last couple years has put the company in a good "jumping-off position" to sell those medications after approval, he said.