Glaxo steps up job cuts with UK factory closure

Source: Reuters

Date :12/11/2008 00:09:25

GlaxoSmithKline , the world's second biggest drugmaker, said on Tuesday it planned to close its Dartford manufacturing site in south-east England by 2013 with the loss of 620 jobs.

By Ben Hirschler

The decision to close the facility, which is subject to consultation with trade unions and staff, reflects falling demand for drugs made at the site as patents expire, and is part of an ongoing review of operations across the group.

Chief Executive Andrew Witty, who took over in May, has made increased efficiency one of his top priorities for the company as he seeks to improve returns to shareholders after several years of lacklustre performance.

Last week, Glaxo told staff it was axing 1,000 sales jobs in the United States by the end of 2008 as it reorganises the operation there to compete in an increasingly tough market.

Earlier this year, it announced plans for 1,200 job cuts in research and development.

The two biggest-selling products made in Dartford are Lamictal for epilepsy and Valtrex for herpes, which together account for 60 percent of volumes manufactured at the site.

Sales of both, however, are set to fall. Lamictal has faced generic competition from July this year, while Valtrex is expected to lose patent protection in late 2009.

"The current level of manufacturing activity at Dartford is not expected to be replaced by the same level of new business, driving utilisation at the site down to an unsustainable level," Glaxo said in a statement.

Production of newer products that are currently proposed for manufacture at the site will be transferred to other Glaxo factories.

Drug companies worldwide have eliminated thousands of jobs in the past two years as a lack of significant new drugs, declining sales of lucrative flagship franchises and fierce competition have cut into profits.

Pfizer , Merck & Co , AstraZeneca , Wyeth and Bristol-Myers Squibb are among other leading firms to have cut jobs significantly.

(Editing by Paul Sandle)

LONDON (Reuters)