The world's second biggest drugmaker GlaxoSmithKline's is likely to follow smaller British rival AstraZeneca in cutting jobs, as new chief executive Andrew Witty continues his drive to squeeze out costs.
Newspapers yesterday reported the group would announce 6,000 to 10,000 job losses out of a workforce of 100,000. A Glaxo spokesman declined to comment on specific cuts but said the company was implementing an ongoing restructuring programme.
GlaxoSmithKline is due to announce fourth-quarter results on Thursday which are expected to be flattered by the tumbling value of the pound but the underlying picture is less rosy, as generic competition to key drugs erodes sales growth.
GSK employs 1,450 people out of the company's worldwide workforce of 101,000 including 700 staff in Dungarvan Co Waterford and 250 at the company's sales and marketing division based in Dublin.
Headcount reduction is a theme across the pharmaceuticals industry as companies seek to defend profit margins in the face of a wave of patent expirations. Glaxo itself has already announced a series of smaller cuts in various divisions.
Because Glaxo sells the vast majority of its products abroad, it is currently basking in the effects of the pound's sharp fall.
Sterling's slide, particularly against the dollar and yen, will help boost reported fourth-quarter earnings per share by 15-20 per cent, according to analysts.
That will mask a heavy generic impact on sales of products such as Lamictal for epilepsy and antidepressant Wellbutrin.
The favourable currency effect should last through 2009 - as long as the dollar holds up. Deutsche Bank forecasts that Glaxo's group sales will decline 3 per cent in local currencies in 2009 but still rise around 15 per cent in sterling terms.
Reuters