The drugmaker is reeling from a 38 percent drop in global sales of its troubled Avandia diabetes pill, as well as generic competition. So as part of its earnings announcement this morning, Glaxo ceo JP Garnier says a reorganization is designed to save about $1.4 billion in costs by 2010, with 40 percent in cuts coming from manufacturing, another 40 percent in sales and administration and the remaining 20 percent from R&D infrastructure.

There was no word on the exact number of jobs or sites to go, but Glaxo employees have been expecting this move for months, ever since the controversy over the heart risks associated with Avandia emerged last May. The notion was reinforced as rival drugmakers experiencing similar problems - Pfizer, AstraZeneca, Bristol-Myers Squibb and Novartis - in recent months began or annonced their own cost-cutting moves. UPDATE: A source tells us that about 1,000 sales jobs will be cut, although approximately 500 of these positions are already vacant. We are awaiting further word from the drugmaker. UPDATE #2: Glaxo declined to comment on specific numbers. There are 80 manufacturing sites, by the way.

“We are very conscious that these initiatives will impact our staff in certain areas of our business and we regret that job reductions will be a necessary part of this programme. We will do everything we can to support those employees who are affected,” JP says in a statement. “However, by making the changes we envision, GSK will be better placed to address the challenges we face in 2008 and be in a stronger position to create long-term value for patients and shareholders.”

Pharma sales were down 2 percent in the quarter, with Avandia declining 38 percent worldwide and 48 percent in the US. Vaccine sales rose 49 percent and OTC product revenue jumped 24 percent, thanks in part to the new Alli diet pill, which sold 2 million starter kits since its June introduction. But companywide sales fell 3 percent and profit dropped 6 percent. The results missed analyst estimates.