Even after going off patent in some markets, GlaxoSmithKline's Advair looked like the gift that would keep on giving. Its sophisticated inhaler device made it difficult to copy, protecting sales of the asthma drug. But with copies and competition now eating away market share, and payers demanding deep discounts, what Advair is giving GSK is grief, including the loss of at least 900 sales and research jobs in the U.S.
The cuts are part of the $1.6 billion restructuring the drugmaker initiated this year as sales of Advair plummeted. FierceBiotech reported that the cuts will be focused on Research Triangle Park, NC, which does R&D for respiratory drugs, as the company consolidates work in Philadelphia and Stevenage in the U.K. But the company told the Wall Street Journal that the cuts involve hundreds of sales and marketing jobs as well.
A state notice filed by Glaxo ($GSK) said 350 of those jobs will be slashed in the first quarter of 2015, another 450 in Q2 and the rest later in the year. The company says as many as 450 employees could be offered jobs with a supplier and some employees might get transfers. The drugmaker is working a deal with CRO Parexel as part of its restructuring in anticipation of taking on thousands of employees from Novartis ($NVS) as part of deals those two have reached in consumer health, vaccines and oncology.
"This is a rescaling of work to reflect market forces that were anticipated but that have accelerated and are affecting the entire industry," the U.K. company told Reuters.
Those market forces include Advair being dropped this year from the national preferred formulary of Express Scripts ($ESRX), the U.S.'s largest pharmacy benefits manager. That meant Express Scripts customers had to either pay out-of-pocket for the drug or switch to a covered alternative. The PBM has said it will return Advair to its allowed choices next year but only after extracting discounts from GSK.
Even with that, GSK says sales of Advair will continue to contract. At one point, the market leader pulled in $8 billion a year, 20% of GSK total revenue. So how much are Advair sales falling? A lot. They are off 24% in the first three quarters of this year to £3.1 billion ($4.8 billion). GSK has released follow-ups it had hoped would fill in behind Advair, but their sales have been lackluster. In the first 9 months of the year, Breo Ellipta had sales of £14 million ($22 million) and Anoro Ellipta £5 million. Note: That is millions, not billions.
AstraZeneca's ($AZN) Symbicort, for one, has taken advantage of Advair's disappearance from some formulary lists, growing by 30% in the second quarter. Meanwhile, copies of Advair have been released in some parts of Europe, further depressing sales. Worldwide, sales of respiratory drugs have fallen 9% for the drugmaker this year.
In its statement to FierceBiotech, the drugmaker emphasized that the cuts are not across the board but targeted: "In the U.S., we are reshaping and reducing the size of our commercial and R&D operations (now 17,000 employees) to be more agile to flex with shifting market demands."
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