Fears for 4,000 jobs as GlaxoSmithKline seeks more savings

Drugs giant GlaxoSmithKline added to job woes in the sector today as it upped cost saving targets amid fears it plans to axe 4,000 roles.

The news comes a week after AstraZeneca revealed it was cutting another 8,000 jobs worldwide, on top of 12,600 job losses already made.

Glaxo is aiming to slash annual costs by a further £500 million within two years, but said it would "try to preserve jobs".

"As before, we will not be providing targets for job reductions and we will announce restructuring outcomes once employees, relevant works councils and trade unions have been consulted," it said.

Glaxo has its headquarters in Brentford, Middlesex, and research bases at Stevenage and Ware in Hertfordshire and Harlow in Essex.

Its UK manufacturing operations include sites at Ulverston in Cumbria, Montrose, Angus, and Irvine in Ayrshire.

Glaxo said job losses in the UK would be in the "hundreds not thousands".

Much of the impact of the new cost savings will be in its research and development division, particularly neuroscience dealing with depression and pain.

The group has been cutting jobs over the past year, having ramped up cost savings by £1 billion last February.

But Glaxo has declined to confirm how many of its 99,000 staff have been affected so far.

It delivered £1 billion of annual cost savings in 2009 and has another £2.2 billion to go by 2012.

Most of the new savings outlined today will be made in 2011.

Glaxo said: "A significant proportion of these new cost savings will be generated through reduction of infrastructure. Approximately 70 per cent of these new savings will be directed to the bottom line to enhance profitability."

The news came as Glaxo announced a 12 per cent rise in underlying pre-tax profits to £8.7 billion for 2009, up from £7.8 billion in 2008.

Global demand for swine flu treatment and vaccines helped it return to annual sales growth for the first time since 2007, with turnover ahead by 16 per cent to £28.4 billion.

Recent reports have suggested Glaxo plans to cut 4,000 jobs globally under this latest cost saving exercise.

But the firm said today it was also expanding in growth areas, launching a new research and development unit to look into rare diseases.

Pharmaceutical firms have been overhauling their R&D capabilities into more profitable areas as they suffer amid competition from cheap generic rivals.

Glaxo said it faced a £1.4 billion hit to sales last year due to generic competition, although this was offset partly by the swine flu boost.

The group made sales of £883 million from its H1N1 flu pandemic vaccine in 2009 - largely in the fourth quarter.

It believes sales for its swine flu vaccine will remain at similar levels for 2010, despite governments cutting back orders due to the easing severity of the pandemic - said to have been no worse than the usual seasonal flu.