November 30, 2014 / 11:19 AM / 3 years ago

GSK to axe U.S. jobs as part of $1.6 billion cost cuts: sources

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A British Airways airplane flies past a signage for pharmaceutical giant GlaxoSmithKline (GSK) in London April 22, 2014.Luke MacGregor

LONDON (Reuters) - GlaxoSmithKline will this week inform U.S. staff of hundreds of job cuts in its biggest market as the drugmaker starts implementing a major cost-saving program, sources familiar with the matter said on Sunday.

Britain's top drugmaker announced at third-quarter results on Oct. 22 that the new restructuring scheme would save 1 billion pounds ($1.56 billion) in annual costs over three years, but it has yet to tell employees where the axe will fall.

Staff in the United States, where GSK has been struggling with falling sales of respiratory drugs, will be briefed on the changes on Wednesday by the company's head of North American pharmaceuticals Deirdre Connelly, the sources said.

A GSK spokesman declined to go into details but said the aim of the restructuring program was to improve performance by reducing complexity and establishing a smaller, more focused and lower-cost organization.

"Each business unit is currently deciding how to respond to this challenge. When we do have proposals, we will first share those with our employees," he said in an e-mailed statement.

Respiratory medicine has traditionally been GSK's strongest business and Advair - an inhaled therapy for asthma and chronic lung disease - is its biggest seller. But Advair sales are now tumbling the United States, while new lung drugs Breo and Anoro are proving slow to take off.

Advair has been hit by competition from rivals and an increasing trend by U.S. health insurers to use hardball tactics to get drugmakers to cut prices for older products.

French drugmaker Sanofi has reported similar pressures from U.S. insurers in the diabetes market.

U.S. insurers, who themselves are under pressure to keep premiums in check, are pushing back particularly hard on prices for medicines in areas like diabetes and respiratory diseases where there are multiple options for doctors and patients.

The revamped GSK operation in the United States is designed to defend the company's margins in this tough environment. The changes will also take into account the movement of some pharmaceuticals staff as a result of a complex asset swap deal with Switzerland's Novartis, which is taking over GSK's oncology business.

Reporting by Ben Hirschler; Editing by Jon Boyle

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