GlaxoSmithKline to open more research centres

GlaxoSmithKline, the UK's biggest drug maker, is planning to open more of its controversial research centres in a move that suggests growing confidence in the revolutionary business model it established at the time of its merger in 2000.

The centres - which it calls centres of excellence for drug discovery, or Cedds - compete for central funds and were established to mimic the creativity associated with smaller biotech companies.

Jean-Pierre Garnier, the chief executive, said yesterday that the company is considering opening a seventh Cedd next year, perhaps by splitting one of the existing centres, which have responsibility for broad disease areas.

He said: "We have already demonstrated that Cedds work, it is a good model and maybe we can continue to expand the model. We might open one more next year."

The existing Cedds are spread around the globe, with two in the UK at Harlow, Essex, and Welwyn Garden City. Their expansion will please analysts who have been sceptical that the business model would be able to solve the giant pharmaceutical company's poor recent record in discovering new drugs. It is also likely to raise expectations ahead of a vital research and development update for the City in early December.

Dr Garnier struck an upbeat tone yesterday, not just on the prospect for the R&D Day, but also on GSK's likely financial results for 2003. Nine-month figures show that earnings have risen by 20 per cent, with profit in the third quarter alone up 22 per cent to £1.7bn.

Although Paxil, the anti-depressant which was until recently GSK's biggest seller, is facing copycat competitors which are dramatically eroding sales, new products such as Advair for asthma and Avandia for diabetes are growing strongly. The company has also recently launched a new version of its anti-depressant Wellbutrin and Levitra, an anti-impotence pill which rivals Viagra and which has won 12 per cent market share.

GSK's US rival Merck yesterday said competition for its Zocor cholesterol drug had led to a slide in profits and it would be cutting 4,400 jobs.

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