GlaxoSmithKline announces proposals for UK pharmaceutical manufacturing operations

Following the merger to form GlaxoSmithKline plc, the company recenlty announces proposals for its UK pharmaceutical manufacturing operations and for the consumer manufacturing sites acquired with the purchase of Block Drug Inc. These proposals are the first recommendations resulting from a global review of the company's manufacturing network.

The proposals follow a detailed analysis of the company's manufacturing operations which has considered a wide variety of factors including current and forecast demand for its pharmaceutical and consumer products, and capacity and cost data across the GSK manufacturing network.

GlaxoSmithKline needs to establish a manufacturing capability that is flexible enough to adapt to the constantly changing environment in which the company operates, efficient and focused enough to keep ahead of the competition, and productive enough to improve customer service and deliver products of value to patients.

The proposals are designed to significantly enhance the competitiveness and productivity of GSK's operations through a series of initiatives and changes. Included in them are plans for process design improvement, new global systems and standards for logistics, and procurement benefits resulting from the enlarged company's buying power. In addition, the company's manufacturing capacity will be consolidated into a smaller, globally integrated network of manufacturing sites. These proposals will be the subject of full, thorough and proper consultation, in line with the company's policy and its legal obligations.

Proposals for UK pharmaceutical manufacturing operations

The company proposes to close its site at Speke, Liverpool over the next 3 years. The site predominantly manufactures CFC-containing asthma inhalers and demand for this type of inhaler is in decline following progressive implementation of the 1995 Montreal Protocol to ban the use of all ozone-depleting substances. This proposal would result in the potential loss of up to 500 jobs.

The company also proposes to transfer certain operations at its Barnard Castle site in County Durham, which are duplicated elsewhere, to other sites in the global manufacturing network. The site currently employs 1500 people and will continue to be one of GSK's largest manufacturing sites in the world. A reduction of up to 400 jobs at Barnard Castle over the next three years would occur as a result of these proposed changes.

In addition, GSK proposes to sell its site at Montrose, Angus as many of the operations at this site are duplicated elsewhere in the global manufacturing network. As a result of the review, a combination of positive factors regarding the site has indicated that a proposal should be made to sell it, with a number of GSK products continuing to be manufactured under long-term contract with the site's prospective new owner. Other Montrose products would transfer to alternative manufacturing facilities within the GSK network over the next three years. Montrose, which manufactures bulk 'active' ingredients for around 20 pharmaceutical products, currently employs 720 people.

Proposals for consumer manufacturing operations

With the purchase of Block Drug Inc. earlier this year, GSK acquired several consumer healthcare manufacturing sites. Operations at some of these sites are duplicated elsewhere in the existing GSK manufacturing network and, as a result of the review, the company believes it can achieve greater efficiency by incorporating these operations into existing GSK consumer healthcare manufacturing sites.

Consequently, GSK proposes to close over two years two former Block consumer healthcare manufacturing sites at Plymouth, Devon, and Puerto Rico resulting in the eventual loss of 170 and 275 jobs respectively. Production at these sites would be transferred to GSK's facilities in Maidenhead, UK and Clifton, USA. It is also proposed that over two years there would be a reduction of 110 in the number of staff employed at the former Block/Stafford Miller manufacturing site in Dungarvan, Ireland.

GlaxoSmithKline recognizes the impact these proposals would have on employees and local communities and would work with local representatives of affected areas to develop ways of minimizing those effects. The company is planning to reduce the effect of job losses through a variety of measures, including re-training, provision of outplacement services, voluntary redundancy and early retirement.

Tim Tyson, President of Global Manufacturing & Supply, GlaxoSmithKline said, "These proposals follow a detailed review that examined every aspect of our site network, and implementing them would significantly reshape and improve our manufacturing business. GlaxoSmithKline remains strongly committed to the UK. The company employs over 25,000 people here -- around a quarter of its global workforce -- and conducts over 40% of its research & development in the U.K. With almost 20% of its global manufacturing workforce based in the UK, it remains a core location for the GlaxoSmithKline manufacturing network.

We fully recognize the impact these proposals would have on some of our staff and we regret the need for the loss of jobs. We are committed to providing extensive support to affected employees and their communities."

GlaxoSmithKline -- one of the world's leading research-based pharmaceutical and healthcare companies -- is committed to improving the quality of human life by enabling people to do more, feel better and live longer.

Source: GlaxoSmithKline

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