Fresh fears for jobs as GSK eyes up cuts

Feb 2 2009 By Karen Dent, The Journal

THERE are fresh concerns for North East jobs after it was reported drugs giant GlaxoSmithKline is set to wield the axe again when it announces its full-year results later this week.

The company, which employs around 1,000 people at Barnard Castle in County Durham and 500 in Cumbria, is understood to be planning further restructuring which could result in anywhere between 6,000 and 10,000 redundancies worldwide.

GSK announced 200 job losses at Barnard Castle in December on top of a separate review last October which identified 20 posts to be shed. The jobs are expected to go in the next year to 18 months.

The factory on Harmire Road is Barnard Castle’s biggest employer. GSK has invested £48m in the plant, which makes the Zovirax coldsore treatment and new products, over the last couple of years. It has pledged to plough in a further £17m during 2009 and said in December it remained committed to Barnard Castle and wanted to ensure a sustainable future for the site.

But the new fears for jobs comes as the pharmaceuticals company looks to be further tightening its belt as it battles against the challenges of cheap generic medicines. Competition from generic rivals to the firm’s key brands, such as bipolar and epilepsy treatment Lamictal, and ongoing weakness for its under-fire diabetes drug Avandia could have hit sales, according to Charles Stanley analyst Jeremy Batstone-Carr.

The job losses announced at Barnard Castle late last year were part of an ongoing redundancy programme aimed at saving £700m by 2010.

GlaxoSmithKline employs around 100,000 people worldwide, with 18,000 staff in the UK, and an announcement of further redundancies is expected on Thursday when it unveils its latest figures.

Rival drugs giant AstraZeneca has confirmed plans to reduce its global workforce by a further 6,000. The company did not say where the axe will fall or what impact it would have on its 11,000 staff in the UK.

GSK’s results on Thursday are expected to show that the firm has benefited from the weakness of the pound. The group is one of the largest dollar earners in the FTSE 100 Index, which is likely to have helped boost figures.

On an operational basis, Mr Batstone-Carr forecast the results to show a slight drop in underlying sales and earnings compared to 2007 and with foreign exchange movements stripped out. He is predicting pre-tax profits of £6.86bn in 2008, down from £7.45bn in 2007.