GSK buyers to reap merger benefits

1 February 2001
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01 February 2001 | Cathy Hayward

Procurement is set to provide the bulk of the savings generated by the newly merged pharmaceutical giant GlaxoSmithKline.

The company, created by the merger of Glaxo Wellcome and SmithKline Beecham late last year, is believed to have set a savings target of £850 million over the next three years, of which two-thirds will come from procurement. Purchasing chiefs are set to meet key suppliers at the beginning of April to discuss future strategy, including possible supplier rationalisation.

In an exclusive interview with SM, Willie Deese, GlaxoSmithKline's global head of procurement, speaking from the firm's US base in Philadelphia, would not confirm the savings target but said no purchasing staff would be made redundant as a result of the merger.

Other functions are thought to be losing at least 20 per cent of staff as part of the savings.

"Purchasing will play a key part in delivering the synergy targets of the new organisation and as such the head count will not be lowered," Deese said. "Procurement staff will be involved in consolidating and gaining competitive prices from the supplier base, which is extremely diverse and takes time and energy to maintain."

The firm, which has a 7 per cent share of the global pharmaceuticals market, has a worldwide administration, sales and goods spend of £11.6 billion. Around 1 per cent of the global 100,000-strong workforce is involved in purchasing.

The Manufacturing, Science and Finance (MSF) union, which represents GSK staff, said with over 5,000 jobs set to disappear round the world, redundancies were inevitable and claimed purchasing jobs were not safe. "Procurement staff may be needed to deliver the savings, but once that is achieved, they too will be rationalised. There is no hiding place for anyone," said an MSF spokesman.

He added that Glaxo closed the Wellcome research centre in Kent following its takeover in 1995. Despite claims that positions would be safe, most of the 3,000 scientists lost their jobs.

Lobby group Save British Science said the merger was not necessarily bad news for suppliers. "Because two British firms have merged, scientific research will remain in the UK and not drift to the US," said Peter Cotgreave, the organisation's director. "Although there are some areas of duplication and some suppliers will lose out, the vast majority will be used to help the new body with additional research demands."

Sir Richard Sykes, GSK's new chairman, has promised to double research and development spending and create "the Microsoft of the pharmaceuticals industry".


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