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GlaxoSmithKline (GSK) has appointed James Murdoch, the chairman and chief executive of News Corporation, Europe and Asia, the parent company of The Times, as a non-executive director.
He is also non-executive chairman of BSkyB, in which News Corporation holds a 39.1 per cent stake.
Sir Ian Prosser and Dr Ronaldo Schmitz will retire from the GSK board at the group’s annual meeting on May 20, when Mr Murdoch takes up his appointment.
The British pharmaceuticals group is expected to join the growing list of companies announcing sharp job cuts this week.
GSK could shed about 6,000 employees globally as it faces competition from companies making cheaper, generic copies of its drugs and continuing pressure to shift away from developed economies to tap into the growth in emerging markets.
The group employs 18,000 people in the UK in its manufacturing, corporate management and research and development divisions, but a spokesman for the company could not say how many of these jobs would be lost. The company said that the cuts were not related to the recession but were part of a broader restructuring in the global drugs industry.
Although cuts would be made across GSK's international operations, the spokesman said that it employed “disproportionately a higher number [of people] in the UK ... The UK represents 20 per cent of our 100,000-strong global workforce, but less than 10 per cent of sales,” he said. “We don't announce big headcount reductions until we talk to the unions and work councils first. We have a good relationship with the unions and we've had ongoing consultations with them for the past two years.”
GSK started restructuring in 2007 to increase its exposure to developing economies. The spokesman said that the company had made four acquisitions in emerging markets in the past six months. “We've bought firms in Egypt and Pakistan and, from the Belgian company UCB, we've acquired some brands in emerging markets. We're also expanding into consumer healthcare with the Biotine oral care brand.”
Analysts say that, in addition to the pressure to move into new markets, the pharmaceuticals sector generally needs to develop new drugs as patents run out on the big money-spinning products discovered 15 to 20 years ago. A new “copycat” industry is growing around manufacturing less expensive, generic versions of the bestselling drugs, especially for sale in developing economies. Companies specialising in generic replicas include Teva, an Israeli company, and Ranbaxy, from India.
GSK said that it was not focusing on lobbying for changes or extensions to the patent laws, but on investment in new products. “We have 30 drugs in the pipeline now and, a few years ago, it would only have been only a handful,” the spokesman said.
Market-watchers say that GSK is in a stronger position than AstraZeneca, its nearest British rival, which last week announced 6,000 job cuts. GSK has more drugs in late-stage development and fewer looming patent expiries, but nevertheless it faces a drop in revenues. Patents for two high-earning products — Imitrex for migraines and Lamictal for epilepsy — lapsed last year.
While Glaxo's spokesman would not comment on the British jobs toll, he said that the company's headquarters would remain in the UK for the foreseeable future.
The exact number and nature of the job losses will be confirmed when Glaxo's annual results are published on Thursday.
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