Glaxo facing staff exodus as delays to merger hit morale

Glaxo Wellcome, Britain's largest pharmaceutical group, is facing a brain drain of its brightest managers, with some of its best "competing" for redundancy due to the extended delays to completion of its merger with SmithKline Beecham.

Glaxo Wellcome, Britain's largest pharmaceutical group, is facing a brain drain of its brightest managers, with some of its best "competing" for redundancy due to the extended delays to completion of its merger with SmithKline Beecham.

The company has repeatedly said it is "business as usual", despite twice being forced by United States regulators to delay the tie-up. However, Glaxo senior managers are worried that some of the brightest management talent plans to leave with large redundancy cheques.

One executive said: "We will have several applicants for new roles in the merged company. But if you're in your thirties, recently married, with a baby on the way and a mortgage to pay, would you be 110 per cent enthusiastic in an interview? Would you make sure you came over at your best when you could pick up a lump sum by making yourself redundant?"

Some managers are tempted to join small, entrepreneurial biotechnology companies. The problems are occurring mainly among administrative staff, where most job losses will arise. Both companies say very few research jobs will be shed.

The delays are doubly worrying for Glaxo's management, given that managers pondering a move have little incentive to exert themselves. Staff who have been on the payroll for only a matter of months, and have built up little loyalty to the firm, may also qualify for redundancy payouts under European law.

Morale at Glaxo is said to have slumped as a result of the uncertainty over the merger. At the interim results in July, Sir Richard Sykes, the executive chairman, said morale was high, but conceded there was anxiety."People look at the redundancy package and know they'll be looked after," he said.

Ten months after announcing the link, Glaxo and SB have not resolved how to align their differing management structures. They also have incompatible information technology. The completion date is now set for the end of this year, having been put back from 21 August to 25 September previously.