Sepracor has suffered a major decline in third-quarter earnings and is looking to shed some 300 members of its field force.

Net income declined 33.4% to $42.9 million, or $0.37 per share, while revenues slipped 1.9% to $283.9 million, due principally to a decline in sales of inhalable asthma medicine Xopenex (levalbuterol). Turnover from the drug was down 25% to $94.4 million, which Sepracor said was the result of the lower reimbursement rate levied on the drug by the Centers for Medicare and Medicaid Services.

On the bright side, sales of the insomnia drug Lunesta (eszopiclone) were up 13.6% to $160.9 million and year to date prescriptions grew 10.6% to nearly 5.24 million compared with the same period in 2006. The company recently linked up with GlaxoSmithKline in an alliance which will see the UK drugs giant sell Lunesta on international markets (ie excluding the USA, Canada, Mexico and Japan) under the brand name Lunivia.

However, like many drugmakers, Sepracor needs to cut costs and a review of its operations means that it is going to eliminate about 300 sales and marketing positions. This move, together with “other anticipated cost reduction initiatives across the business”, should cut expenses by $90-$100 million in 2008.

Chief executive Adrian Adams said that the GSK deal will add “significant long-term value to the [Lunesta] franchise. This, “together with the ongoing development of a more focused, targeted and productive commercial organisation”, will result in “the next phase of growth for Sepracor”, he noted, adding that the firm will “grow and differentiate our R&D pipeline and aggressively pursue synergistic corporate development and licensing opportunities”.

Despite the earnings decline, the news of the job cuts pushed Sepracor’s shares up 3.7% to $26.73.