Glaxo sells Rhode Island plant to US rival for $60m

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The Independent Online
GLAXO WELLCOME yesterday confirmed its commitment to reducing manufacturing costs, with the sale of one of its American factories and the ending of production of a minor drug.

The pharmaceuticals giant is selling its factory in West Greenwich, Rhode Island, where it manufactures the anti-hepatitis B and C treatment Wellferon, to rival drugs maker American Home Products for $60m (pounds 37.5m). The sale is expected to close by the end of September, pending regulatory approval and the transfer of various permits.

Glaxo Wellcome's other factories making Wellferon, at Beckenham and Dartford in Kent and in Spain will cease manufacturing the product within the next few months.

A spokesman for the company said yesterday that Wellferon had been superseded by other, more effective drugs, including Glaxo Wellcome's own treatment Zeffix.

The move is part of efforts by Glaxo to cut its costs and devote more investment to researching and developing new drugs. Further factory closures and job cuts are expected when the company's internal strategic review is completed towards the end of the year.

`"In the past, pharmaceutical companies have not paid much attention to manufacturing efficiency, and this move is part of an industry-wide effort to reduce production costs," said Nigel Barnes, pharmaceuticals analyst at Merrill Lynch. In the past few weeks, Glaxo has been linked with American Home Products as a possible merger partner. The company repeated its earlier refusal to comment on "market speculation" yesterday.

Early last year Glaxo held abortive merger talks with its British rival SmithKline Beecham, which itself broke off merger talks with American Home Products to discuss the Glaxo linkup.