Fears over 1,600 jobs as Glaxo swings pounds 500m axe
Friday 01 September 1995
Deputy City Editor
The fate of 1,600 staff at the former Wellcome research centre in Beckenham, south-east London, will be decided this month as Glaxo announces annualised cost savings of pounds 500m from its pounds 9bn takeover of the drugs company.
The savings, expected to be announced with interim figures next Thursday, have been achieved in the face of a rising tide of resentment at Wellcome sites where a quarter of the workforce are expecting to be made redundant by the end of September.
Five months after the takeover, Glaxo is also expected to reveal the cost of the integration - with analysts pencilling in a one-off provision of pounds 900m, of which pounds 200m will be taken against first half figures, the first since the hostile bid.
Staff at Beckenham were angry yesterday that they had not been informed of the departure of one of the company's most renowned researchers before news leaked out in the press. Dr Salvador Moncada, who pioneered understanding of the role of nitric oxide in the human body in the late 1980s, is leaving to set up a research laboratory at University College London.
Staff who knew Dr Moncada said his departure reflected a general "anti- Glaxo" feeling at the site, which is to be closed as part of the cost- cutting that has followed Britain's biggest-ever hostile takeover in March.
The loss of Dr Moncada highlights the difficulty Glaxo faces in persuading former Wellcome employees to stay at the enlarged group. Appointments already announced by the company have been heavily biased towards former Glaxo employees.
More than a quarter of the 1,600 jobs at Beckenham are now expected to face the axe, with the remainder transferring to Glaxo's new state- of-the-art research centre in Stevenage. Glaxo is expected to give a firm forecast of the numbers to be laid off from the combined group's 17,000 UK employees at next week's meeting.
A source at Wellcome's development and manufacturing plant in Dartford said a similarly gloomy atmosphere pervaded that site. A union representative at the plant accused Glaxo of failing to consult with workers and said that the management had only started detailed discussions over redundancies and terms after it had threatened legal action a month ago.
He added: "Six months ago, Wellcome was a viable company making good profits. Now we have effectively been gutted by Glaxo."
Although bitter at the way Wellcome is being dismembered by Glaxo, staff admitted that the severance terms were generous. A scientist aged 50 with 20 years service, for example, could walk away with two years salary.
A resource centre has been set up at Beckenham to help staff find other work, and Glaxo is also prepared to fund courses for people leaving the company who want to retrain.
Interim figures next week will include Wellcome for about 3.5 of the 6 months period. They are expected to show pre-tax profits before exceptional items 35 per cent higher at pounds 1.14bn. Taking account of the shares issued during the takeover, earnings per share should be about 18 per cent higher.
Analysts now believe Wellcome's prospects were substantially undervalued by the stockmarket at the time of Glaxo's hostile swoop. They now agree with the company's claim that the Wellcome Trust, its largest shareholder, sold it out on the cheap.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...