GSK to Cut Billions in Costs by Embracing AI, Sparking Job Cut Fears
The pharmaceutical giant plans to close its Stevenage R&D site and invest in AI technologies to achieve significant annual savings.
GSK announced plans to cut billions in costs over the next three years through the adoption of artificial intelligence, raising concerns about potential job losses. The FTSE 100 company revealed it will close its research and development site in Stevenage and relocate staff to a new 300,000 square foot facility in Cambridge, located near its competitor AstraZeneca.
Prime Minister Andy Burnham welcomed the £400 million investment in the new Cambridge facility, calling it a "vote of confidence in British business." GSK also intends to upgrade its R&D facilities in Ware and move some staff there as part of the restructuring.
The company's chief executive, Luke Miels, stated that GSK is "putting our money where our mouth is" regarding the investment. However, the move raises questions about the future of the 1,800 employees at the Stevenage site.
In its half-year results update, GSK outlined a strategy to save £1.9 billion annually by 2029 through the "reallocation" of spending. These savings are intended to fund major clinical studies and the new laboratory facilities. While GSK has not disclosed specific details on potential headcount reductions, job losses are anticipated in areas such as procurement and departments managing legacy drugs, which are less profitable as their patents expire.
GSK indicated that technology and AI will contribute to cost savings by processing large volumes of data to aid drug research. Miels suggested that AI tools, while requiring human oversight, will enhance employee effectiveness.
This announcement comes as AstraZeneca CEO Pascal Soriot recently downplayed fears of AI causing widespread job losses, calling them "a bit of a fake story."
GSK reported a 5% increase in sales, reaching £16 billion for the first half of the year. However, profits for the period decreased by 31% to £2.8 billion, largely due to a £1.3 billion charge after GSK discontinued the development of camlipixant, a chronic cough treatment, following unfavorable clinical trial results.