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GSK to cut jobs

24/10/2007

Pharmaceutical giant GlaxoSmithKline(GSK) has confirmed that it is planning to slash jobs as part of a wider cost-cutting programme.

News of the planned job losses came as Europe's largest drugmaker reported a fall of seven per cent in third-quarter pre-tax profits, which slumped to £1.88 billion in the three months to September 30th.

British-based GSK, which employs over 100,000 people in 117 countries, said that it would be making an unspecified number of job cuts as part of a cost-cutting initiative designed to create pre-tax savings of up to £700 million by 2010.

The company says that a wider operational reform programme it is implementing will partly mitigate the expected impact of lower sales of its diabetes treatment Avandia on 2008 earnings and competition from generic drugs.

Commenting on the plans, GSK chief executive JP Garnier said: "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.

"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."

Although GSK's group turnover increased by one per cent to £5.5 billion over the third quarter, the company said that its pharmaceutical turnover dropped by two per cent to £4.6 billion as a result of generic competition in the US and a slump in Avandia sales.

Over the period, sales of the treatment for type two diabetes fell 38 per cent to £225 million.

Analysts say the drop is linked to a US report in May, which suggested the drug might increase the risk of heart attack.

Confirmation of the planned job cuts at GSK comes after its Swedish rival AstraZeneca announced its intention to cut 7,600 positions as part of a restructuring exercise unveiled over the summer.