Gilead Sciences’ new business service center is a win for North Carolina but comes with some losses for the company's home state of California.
The Foster City-based pharma plans to cut 178 jobs in California effective May 30, according to a WARN notice filed with the state.
It’s “the latest example of a major Bay Area company moving workers to a cheaper location” the San Francisco Chronicle reported. Half of the jobs (89) are expected to shift to Gilead's now-underway Research Triangle Park service center in North Carolina, according to the Chronicle, depending on how many employees choose to relocate.
The new North Carolina center will employ 275 people when fully completed in two years, Gilead says. The company will spend up to $5 million on the project, the North Carolina governor’s office said in a statement.
Under a North Carolina economic development and jobs grant program, Gilead can earn up to $10 million in reimbursement payments over 12 years through the project. North Carolina estimates it will see an annual economic gain of more than $39 million.
In a statement last month, Gilead said it is committed to maintaining its headquarters—and growing its business—in Foster City. The biopharma employs more than 13,000 around the world with more than half located in California.
Gilead’s cost-efficiency consolidation is a familiar one in the pharma industry. Novartis stirred interest back in 2014 when it cut $3 billion in costs by creating a business services unit with hubs around the world.
Johnson & Johnson, Bristol Myers Squibb and Amgen have similar business service hubs, all in the Tampa Bay, Florida area. The most recent was Amgen’s facility which opened in 2018.
However, business services hubs can themselves end up as targets for job cuts. When Novartis rolled plans a few years ago for a 19% staff reduction, 700 jobs were cut in the business services unit, and Bristol Myers cut some jobs at its "capability center" in South Florida in 2019.