This is one of the hazards that state governments risk when striking incentive deals with companies. In this case, the drugmaker was granted $4.6 million through various programs in exchange for maintaining employment at 6,900 jobs in Pennsylvania; Glaxo's US headquarters are in Philadelphia and various facilities are located nearby.
Right now, Glaxo's employment level stands at about 7,000, but with job cuts planned the drugmaker may be on the verge of breaching its deal, according to The Philadelphia Inquirer. A Glaxo spokeswoman tells the paper that "the 6,900 is a commitment. I feel like we're well within that, but I can't make any commitment on what our overall numbers are going to look like."
And Dave Stout recently reiterated that Glaxo US headquarters will remain in Philadelphia, but the drugmaker hasn't yet specified how many jobs will be lost from which regions, although we do know that about 1,000 sales rep positions will be eliminated, another 650 jobs will be lost at a manufacturing plant in Puerto Rico and 310 more jobs will go at two UK sites as a result of the restructuring.
If Glaxo can't maintain 6,900 jobs, the state would ask for the money to be returned. And that may happen, given that Glaxo hopes to save $1.4 billion through cost cutting. The math may indicate it would simply be cheaper to return a few million if further job cuts save more. The outcome, in this case, is unclear, but the lesson is that, given that pharma is undergoing a contraction, offering a drugmaker cash in return for promises may not be a good bet right now.
1 Comment
[...] unknown: [...]