Andrew Witty, GSK’s chief executive officer, is really fed up with what’s going on in Europe as governments continue to cut what it pays for pharmaceuticals as part of austerity plans.

However, Witty is optimistic overall about the drug giant’s future despite “patent cliffs,” generic competition and the astronomical costs of bringing new products to market.

The optimism of the CEO who took over in 2008 is most likely good news for the thousands of GSK employees in the Triangle area. In discussing GSK’s third quarter results, Witty hinted at further cost reductions –  but he seems to be targeting Europe, where sales declines are hitting profits. Hard.

“We’re really looking at the whole business in the context of what we believe is quite a changed environment,” Witty said, as quoted by London’s Telegraph newspaper. “We’re taking the chance to reassess whether we’ve got the right resource focus in the right areas.”

Europe may not be that place.

“I’m struggling to imagine a world where Europe gets easy,” he said.

Witty, a GSK employee since 1985, has demonstrated his mettle before in dealing with European politicians when it comes to how he runs the company and where investments are made that lead to more jobs. The U.K. secured GSK expansions only when accommodations were made about intellectual property, for example.

If drug payments continue to be cut – well, don’t be surprised if GSK moves jobs elsewhere.

The Future

In a conference call with analysts, Witty was decidedly more positive about GSK’s future, citing the company’s drug pipeline and growth outside of Europe.

Responding to a series of questions from an anlyst at Sanford C. Bernstein, Witty launched what evolved into a state of the company speech.

Here are some of the highlights, based on a transcript provided by SeekingAlpha:

Margin and Europe:

“I think what I’d probably do is simply reiterate what I said at the midyear, which is that essentially, we’ve seen that European pricing pressure this year essentially shift our view of the company one year backwards, if you will. … We haven’t been able to get that minimal sales growth that we hoped for this year. As we look forward, we’re optimistic that we will be able to achieve that, not least because of the strength, the underlying strength of all the various businesses with the exception of Europe. …”

Generics and pricing competition:

“The more dangerous phenomenon in Europe is therapeutic reference pricing where you see brands, not branded generics, but other products in the category. So for example, obviously, Symbicort, but more recently, the Chiesi [ph] fixed dose combinations, being grouped together in therapeutic baskets triggering off price reductions. That’s what caused the problem in Germany and has really driven a huge amount of our price downside this year. Now the good news is once you’ve been therapeutic — I’m not sure there’s a verb for this — but once you’ve been basketed, you can’t be basketed again. So we’ve been through the step down, but that’s more — that has been where the pain has come realistically.”

Clinical trials:

“So I think in terms of pipeline, it’s really starting to look very, very exciting. And while we can’t dismiss all the risks until we’ve gone through the regulatory processes and we started to launch the products, there’s no question in terms of both numbers and potential scale of opportunity, we’ve never had a portfolio like this at GSK, and I’m not sure too many other companies have ever had it either.”

The “Anchors:”

“And that’s a key piece of our optimism for the next few years built on top of what we increasingly think, except Europe, is an extremely solid set of platforms in our growth businesses and a very stable American business. So all of that put together puts — this, for me, has been an interesting year and a particularly interesting quarter, where we have lots of noise, lots of things which take, if you will, the shine of what the company is.

“But actually, the strategic strength of the company is, I think, really beginning to become clear once you peel the paint, the veneer off the top. Once you take that noise out of the system and you look through at what the consumer, the EMAP [emerging markets, Asia, Pacific] business, the Japanese business, the American business is doing and then add in the potential pipeline, we really feel like the strategic anchors of the company are starting to look very, very promising. And that’s why we remain committed to the view that we can get pretty quickly back to sustainable sales growth.

“And what’s critical and has been proven during 2012, is if we can get sales growth, then the margin challenges become very straightforward. If you don’t get sales growth, much more difficult. And you’ve seen in 2012, without sales growth, margin gets very challenging. With sales growth, margin kind of looks after itself. And that’s really the way we’re viewing the business over the next few years.”

Recent Deals

GSK is seeking a new AIDS drug, is targeting Alzheimer’s through a recent investment, and recently took over Genome Sciences. Witty remains aggressive.

The company is striving to put the Avandia diabetes drug disaster and $3 billion in payments to settle past drug cases behind it. But as Europe demonstrates, Witty’s job is not getting easier.

[GSK ARCHIVE: Check out a decade of GSK stories as reported in WRAL Tech Wire.]