GSK to cut more jobs as it ends research into painkillers
Hundreds of research and development jobs in the UK will go at GlaxoSmithKline, as Europe's biggest pharmaceuticals company ends development of new depression and pain medicines.
The changes, which will be implemented over the next two years, come after last week's announcement that AstraZeneca is to cut 8,000 jobs worldwide and will start outsourcing more of its research and development.
GSK, which employs 16,000 in the UK, has already cut more than 2,000 jobs around the world since 2007 as part of a restructuring drive.
Andrew Witty, chief executive, said: "We are making sure that we are spending money where we have the best chance of returns. These are the areas which are most expensive and where there is highest risk."
Typically, six large-scale clinical trials have to be carried out on a new antidepressant because of the difficulty in measuring, clinically, whether they have succeeded.
A degree of controversy has attached itself to Paxil, GSK's biggest-selling antidepressant, which is also known as Seroxat, after it was linked to an increased risk of suicide in some cases. The company has agreed to pay about $100 million (£63 million) to settle a number of lawsuits relating to the drug.
GSK said that group sales grew 3 per cent last year after falling in 2008, as sales of its Relenza swine flu vaccine soared to £720 million, compared with £57 million in 2008. Fourth-quarter profits were up by 66 per cent to £2.25 billion, compared with £1.39 billion a year earlier. The strong year-end figures pushed annual pre-tax profits up 16 per cent to £7.89 billion. Turnover for the year rose 16 per cent to £28.3 billion. The drugs giant increased its total dividend by 7 per cent to 61p, raising the fourth-quarter payout 6 per cent to 18p.
In common with other big pharmaceutical groups, GSK has had to overcome the loss of patent protection on some of its bestselling drugs. Valtrex, a treatment for herpes, was the latest blockbuster to lose protection. However, Mr Witty argued that GSK now faced a lesser threat from generics than its rivals.
Sales in consumer healthcare, including brands such as Lucozade and Sensodyne toothpaste, grew 7 per cent. Lucozade sales were down in the UK as people bought less of it at petrol stations and corner shops. Alli, the diet drug, became its third most popular medicine sold over the counter in Europe within months of its launch, helped by a big advertising campaign.
Mr Witty said that he did not think any GSK executives would be relocating out of the UK in the wake of the new 50 per cent tax on those who earned over £150,000. He said: "We are a British company and we have got a huge footprint here in Britain. I understand why governments have got to do what they have to do sometimes."
He added that the recent introduction of a "patent box" by the Government had led to GSK investing more in manufacturing in the UK for the first time in 20 years.
Shares in GSK rose by 1 per cent to £12.26. The company also announced the establishment of a new rare diseases research unit