GlaxoSmithKline (GSK) announced that it will reduce its sales personnel by 12% to 7,500 down from 8,500. The company will slash 1,800 jobs resulting in a total of 1,000 layoffs. Some positions have already been eliminated while other personnel will be reassigned to new areas. In certain cases, sales reps will be redeployed to focus on new product launches.
The decision comes in the wake of a rash of sales force cuts by top-tier drug companies in recent months. Pfizer and Merck recently trimmed their sales force operations.
GSK attributes their decision in part to increased generic competition and a decreased demand for primary care reps. The company said that is responding to a growing number of physicians who have been calling for more specialized sales reps with training in a particular product class or therapeutic area.
The company is also consolidating operations and moving personnel from its Philadelphia facility to Research Triangle Park in North Carolina, where it employs about 5,000 people.
Industry analysts weren't too surprised by the announcement. Barbara Ryan, an analyst with Deutsche Bank in New York, told MM&M that GSK's decision is pretty consistent with what its compitetors are doing in terms of continuing to restructure their cost-base in order to become more efficient. “And it's consistent with the impact of sale forces diminishing as formulary positioning becomes more important,” said Ryan.
She added that GSKs decision mirrors that of other new CEOs in the drug industry when they first take the helm. “One of the first things that they do is attack the size of the sales force.” Andrew Witty was appointed CEO of GSK in April of this year.
Ryan said that sales force cuts will likely continue as an industry pattern.