GSK to cut costs in European business
Aims to save £1bn over the next three years
GlaxoSmithKline (GSK) plans to cut costs in its European business after reporting a 7% drop in sales in the region in 2012. Over the next three years, the UK’s largest pharmaceuticals company said a new programme to restructure European operations, drug manufacturing and research, would save at least £1bn by 2016 with related charges of £1.5bn.
Chief executive Andrew Witty said in spite of a challenging operating environment, the company made progress in 2012 to advance potential new medicines across multiple disease areas including respiratory, oncology, diabetes and HIV.
Total group sales dropped by 1% to £26.43bn. Operating profit fell 3% to £7.39bn.
Sales in emerging markets, which account for 26% of GSK’s business grew 10% during the year. In Pharmaceutical and Vaccines, sales were down in the US by 2%; in Japan by 6% (excluding sales of Cervarix, which were up 5%); and in Europe by 7%.
To boost its fortunes, GSK is relying on six key new products, which have already been submitted with the regulators for approval in lung disease, melanoma, diabetes and HIV/AIDS.
A further 14 assets will reach Phase III in 2013/14 and over the next three years. GSK says it has the potential to launch around 15 new products globally.
‘To maximise returns for the Group in this next period we will continue to make changes to simplify our operating model and release resources,’ said Witty. ‘This will involve a series of technological advances and opportunities to eliminate complexities, which we believe can continue to transform our long-term cost competitiveness in both manufacturing and R&D.
Through this we are seeking to simplify our supply chain processes, shorten cycle times, lower inventory levels and reduce our carbon footprint. We believe these approaches can firmly position GSK at the forefront of our industry.’