GSK to cut drug development projects to focus on 'winners'

GlaxoSmithKline is to cancelled, sell or partner some 33 drug development programmes. Photograph: Morsa Images/Getty Images

GlaxoSmithKline’s new chief executive, Emma Walmsley, has laid out plans to cut nearly one in seven of the pharma group’s clinical drug development programmes as part of a shakeup of the business. She also plans to offload 130 non-core brands and possibly sell off the unit that works on treatments for rare diseases.

Walmsley, the former head of the drugmaker’s consumer healthcare business, who took over from Sir Andrew Witty as chief executive in April, said the company would focus more on backing the “real winners” – medicines that generate substantial returns.

Some 33 programmes were to be cancelled, sold or partnered. They included 13 in clinical development, including treatments for hepatitis C, psoriasis, cancer and rheumatoid arthritis, and about 20 in preclinical development. Ninety-four clinical drug development programmes were in progress at Britain’s biggest pharmaceuticals firm. GSK did not release the number of its preclinical programmes, but its rare diseases unit was also under review.

Emma Walmsley took over from Sir Andrew Witty as GSK chief executive in April. Photograph: AFP/Getty Images

Walmsley stressed the research-and-development budget would not be cut and that the money saved would be spent on other areas. To improve the weak late-stage drug pipeline, research would focus on just four areas – respiratory, HIV and infectious diseases, cancer and immuno-inflammation conditions such as arthritis – and they would get 80% of the research spending.

“We have been much more thinly spread but also our spend per asset has been a bit low,” said Walmsley. “More and more. we need to make sure we are backing the assets that are winning … We should be spending where we believe we have an asset that can be competitive, and reallocating money appropriately.”

Walmsley’s efficiency drive will see the number of GSK’s suppliers cut by a quarter by 2020, the sale of 130 minor brands such as Horlicks and MaxiNutrition in Britain and an old antibiotics business, and the streamlining of administrative processes. She wants £1bn of annual cost savings by 2020, which will be used to fund the development and launch of new products and offset the impact of pressure on drug pricing.

GSK already announced last week that it would sell its Horlicks UK brand, shut the Slough factory where the malt drink is made, ditch plans for a new biopharmaceutical factory in Cumbria and outsource some manufacturing from its Worthing site in West Sussex, with the loss of 320 jobs in Britain.

Walmsley said GSK would make the US its “No 1 priority market” – adding this had nothing to do with Brexit.

GSK’s revenues in the second quarter rose 12% to £7.3bn, boosted by the weak pound (they were up 3% at constant exchange rates). The group made a loss before tax of £178m, down from £318m.

• This article has been amended to clarify the number of clinical development programmes being cut, as opposed to preclinical.