British
pharmaceutical and healthcare giant GlaxoSmithKline (GSK) will conduct
large-sized layoffs in China letting go up to 1,000 employees, Beijing-based
Caixin Online reports, citing several GSK China employees.
GSK China
will lay off 450 employees in the first quarter, with more pink slips to follow
into the second quarter, said one unnamed source close to GSK China's top
leadership.
The public
relations unit of GSK China denied this, saying GSK China will not cut its team
size, and on the contrary, it plans to hire more workers to satisfy the needs
of its future development.
In July
2013, a report from the Ministry of Public Security said GSK, in order to
establish a channel to sell its pharmacuetical products, had used travel
agencies to directly bribe or indirectly sponsor some pharmaceutical industry
associations, hospitals and doctors. The case has now entered the legal
process, while GSK China's business has been severely affected, triggering
several layoffs.
Between
March and June 2014, GSK China saw hundreds of medical sales representatives
resign, and since June 2014, quite a few former GSK China medical sales
representatives have filed labor lawsuits against GSK China in Shanghai,
Shandong and Harbin.
Several
industry insiders said GSK China's conducting of another layoff probably aims
to cut its previous business promotion model, as it has suffered declining
business after the bribing scandal.
Before the
2013 scandal, GSK had for years ranked No. 1 in the Chinese market, but since
then it has suffered sharp sales declines.
GSK China's
business focuses on prescription drugs and vaccines. According to its financial
report, GSK China's prescription drugs and vaccine businesses in the first
three quarters of 2013 tumbled 61% from the same period a year earlier. Its
falling business in China has dragged down GSK's global revenues, which fell
11% in the first three quarters of 2014 from the same period a year ago.
In addition
to GSK China's layoff reports, GSK United States also launched layoff plans. In
early December 2014, GSK US announced plans to let go of 350 employees in the
first quarter of 2015, another 450 in the second quarter, and additional 100 in
the second half, aiming to reduce costs.
GSK in its
2014 third-quarter financial report said it would soon launch an internal
reorganization plan, aiming to reduce annual costs by £1 billion (US$1.5 billion) every
year for the next three years, but it didn't provide any details of its layoff
plans.
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