GSK China may lay off 1000 workers in 2015

Want China Times, Staff Reporter 2015-01-23

GSK's research center in Shanghai. (File photo/Xinhua)

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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