GSK shrinks, and respiratory looks set to stumble

GSK's reorg includes cutting 900 jobs in North Carolina.
GSK's reorg includes cutting 900 jobs in North Carolina.

Part one of GlaxoSmithKline's previously announced layoff plans have begun, with the company set to trim its North Carolina headcount by 900 positions. The cuts include R&D and sales staff, the Wall Street Journal reported today.

The shrinkage is part of GSK's efforts to stabilize its business, which the company doesn't expect to turn around until 2016. The problem is one of success: asthma and COPD medication Advair continues to impress doctors to the detriment of its new respiratory lineup which currently includes COPD medications Anoro Ellipta and Breo Ellipta. Analysts consider the respiratory business GSK's financial bedrock, which is why anemic sales of this new line, as well as hefty Advair sales erosion, have made analysts wary about future performance.

While greater payer reimbursement would normally be considered a sales-enhancing milestone, the Elliptas have been running into payer resistance. Although doctors told Leerink in a survey that between 60% to 75% of Anoro prescriptions don't get filled because of insurance issues, money is not the only issue: This survey of 60 healthcare professionals showed that even improved reimbursement rates would not prompt doctors to lean towards Anoro (umeclidinium and vilanterol) or Breo (fluticasone and vilanterol).

This is despite their regard for Ellipta device that delivers the medication and Breo's friendly once-a-day dosing schedule.

Doctors also indicated in the survey that the new Ellipta franchise is a bit of a throwback. Anoro combines a long-acting antimuscarinic agent and a long-acting beta-agonist, while Breo mixes a long-acting beta-agonist and inhaled corticosteroid combination, also known as LAMAs, LABAs and ICS.

Doctors tell Leerink that next-generation treatments are three-part mashups that combine a LAMA, a LABA and an ICS.