Glaxo and SmithKline will keep both research centres

Glaxo Wellcome and SmithKline Beecham will keep open both their research and development headquarters in the event of a merger of the two companies, according to City sources.

The decision comes amid growing concerns from senior Government ministers that the deal would lead to substantial job losses amongst skilled scientists, causing long term damage to the British economy.

By not closing the research and development complexes the drugs giants hope to placate the Government's fears and ease the path for the pounds 100bn- plus merger.

The deal would have to be sanctioned by EU competition authorities. The UK authorities are likely to launch their own in-depth investigation and could lobby Brussels for specific undertakings on research and development jobs and expenditure.

The decision on the R&D centres will safeguard thousands of jobs. Glaxo employs 1,700 people at its main research facility at Stevenage in Hertfordshire, which was opened at a cost of pounds 700m in 1995. SmithKline employs 2,000 people at its new pounds 250m site in Harlow, Essex. There had been fears that one of the companies' flagship R&D sites would be shut to cut costs.

Instead Glaxo and SmithKline are planning to eliminate any duplication in the R&D already conducted at the two sites. They will then use the spare capacity to create a new drugs pipeline and concentrate on new development areas.

However, there could be job losses at some of the smaller R&D facilities the two groups run around the country as Glaxo-SmithKline seeks to rationalise and cut costs. Together, the merged group would employ more than 6,500 R&D people. Thousands of UK manufacturing and administration jobs are also likely to go.

The decision was welcomed by MSF, the white collar science union. Paul Talbot, national secretary for the pharmaceutical industry, said: "This is good news for the employees. There were real fears that the Stevenage site would be closed. But that doesn't mean to say there will not be extensive rationalisation elsewhere. We need more information, which the companies are refusing to give."

There was an uproar when Glaxo closed down Wellcome's research facility at Beckenham with the loss of 1,000 jobs, after winning a hostile takeover bid three years ago.

Glaxo and SmithKline are also preparing to give up some of their best selling drugs to get the merger past the competition authorities.