GlaxoSmithKline 'plans to axe thousands of jobs'

Drugs giant GlaxoSmithKline is expected to announce plans to axe up to 4,000 jobs this week as part of its ongoing restructuring, it was reported today.

It is thought the majority of the cuts will be made to its European and US workforce, as the group shifts its focus to emerging markets, according to the Sunday Times newspaper.

The group, which employs 99,000 staff across the world and has operations in Dublin, Waterford and Cork, is trying to find £1.7bn (€1.95bn) of annual cost savings by the end of 2011, and improve the efficiency of its research and development arm.

It is not yet known whether the Irish workforce will be affected.

It is also shifting its focus away from low growth markets in the West to emerging ones, such as China, where there is greater potential to expand sales, as well as developing its consumer products division.

Glaxo is expected to announce the planned job cuts alongside its full-year results on Thursday, when it is thought the group will report a return to annual profits growth, following an 11% fall during the previous financial year, boosted by sales of its swine flu vaccination.

The group recently said it was expecting an £835m (€962.6m) sales lift in the final three months of its financial year from sales of the vaccination.

But it is unlikely to receive such a big boost in future as governments are renegotiating agreed orders after the severity of the pandemic has proved less than was previously anticipated.

Overall, analysts are expecting the group to report a 12% rise in profits to £8.69bn (€10bn), with sales of £28.23bn (€32.5bn).

Within this, the consumer products division, which includes household names such as Lucozade, Ribena and Aquafresh and Sensodyne toothpaste, is expected to report an 18% jump in annual sales to £4.7bn (€5.4bn).

The announcement of job cuts by Glaxo would be further bad news for the pharmaceutical sector, after rival AstraZeneca said it would be slashing a another 8,000 jobs from across its global operations between now and 2014, on top of the 12,600 roles it has already axed.

The group also lowered its financial guidance for 2010 and warned that it faced challenges from generic competition as its drugs patents run out.

A Glaxo spokesman declined to comment on the report of planned job cuts.

In November, it was announced that up to 250 jobs are to go in Sligo with the closure of Stiefel Laboratories, which was bought by GlaxoSmithKline last July.

The decision was made after a global review by GSK found under-utilised capacity at the plant.

Stiefel Laboratories, which makes skin products, will be closed by the end of 2013, by which time production of all products is being transferred to alternative facilities.