GSK cutting 720 jobs in manufacturing, R&D and support functions at massive Belgian vaccine hub

GlaxoSmithKline announced a restructuring at its vaccines site in Wavre, Belgium. Pictured is the site in 2014. (GSK on Twitter)

GlaxoSmithKline’s vaccines unit has been a bright spot for the company amid challenges elsewhere, but its recent performance doesn’t make it immune to staff cuts. 

GSK is starting a two-year restructuring program at its Belgian vaccine group that’ll reduce its headcount by up to 720 positions, according to the translation of a Wednesday release (PDF). The restructuring will affect R&D, manufacturing and global support functions, and most of the employees who will be affected are managers. Further, GSK doesn’t intend to renew 215 temporary contracts.

The drugmaker employs 9,000 people in Belgium and is the country's largest pharmaceutical employer.

Even as it cuts jobs, GSK plans to invest €500 million in R&D, manufacturing and other technology over the next three years to support development of new vaccines. In manufacturing, it aims to “strengthen the automation of its production … to increase capacity,” the translated release says. 

The changes are aimed at making the company more efficient and establishing a "common approach" to R&D between pharma and vaccines to help the drugmaker decide which pipeline candidates to advance, the release says.

RELATED: Glaxo sees enormous Shingrix potential, but a supply gap still stands in the way 

The news comes as GSK released full-year results for 2019, and again vaccines stood out for the drugmaker. The unit turned in 19% growth at constant exchange rates last year, compared with 17% for consumer healthcare. Pharma sales were flat versus 2018. Further, vaccines turned in a 41.4% operating margin, besting the other groups.

For more than a year, Glaxo’s vaccines group has been riding the strength of shingles vaccine Shingrix, which turned in £1.8 billion ($2.3 billion) in sales in 2019. Still, the launch has been hamstrung due to supply constraints. GSK is working to gradually improve supply until it can bring a new production site online, expected in 2024. 

RELATED: GlaxoSmithKline's spinoff plan is here—and it may not be limited to consumer health 

Sales for GSK’s meningitis vaccines also grew 15% last year to £1 billion ($1.3 billion).

And in the pipeline, the company is looking forward to proof-of-concept readouts for vaccines against chronic obstructive pulmonary disease and respiratory syncytial virus. 

Meanwhile, GSK has also started preparing for its massive consumer healthcare spinoff. That change will leave the company with its innovative drugs and vaccines groups, while jettisoning a global consumer healthcare leader. The company expects the entire spinoff to cost £2.4 billion, with £1.6 billion of that in cash.

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