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Editor: Robert J. Binstock
Profession: Avandia Attorney

Category: Other Avandia News

GlaxoSmithKline (GSK) has announced that they will be cutting jobs at its Zebulon, North Carolina manufacturing plant. The news comes in the wake of lower than expected profits for 2007. The company will forfeit $1.4 million in incentives by cutting jobs at the plant. The incentives were part of an agreement with the state to invest at least $92 million in the plant and create 200 jobs by 2009. The Zebulon plant, one GSK's largest, will no longer be filling vacancies will be letting contract and temporary workers go first. Layoffs may quickly follow. The plant is responsible for the packaging of Avandia and with the demand nearly cut in half over the past several months it is understandable that GSK cannot employ the same amount of people to perform only half of the work.

GSK started companywide cutbacks more than three months ago to save as much as $1.4 billion in annual costs over three years. The drug maker has been hurt by generic competition, unexpected regulatory delays and a $1 billion drop in annual sales of its diabetes treatment Avandia.

Reduced demand is expected for four other pills made or packaged at the plant due to the availability of lower priced generics. The company had planned on having new drugs approved to replace the drugs with generics becoming available; however, over the past year the FDA seems to be exercising more caution when approving drug than it has in the past. This has in turn delayed GSK's ability to get the drugs onto the US market. The Avandia woes may not yet be over either. The FDA is currently investigating the efficacy and the dangers of Avandia. If additional studies confirm suspected risks and cast doubt on the efficacy of Avandia, GSK could experience an even greater loss.