GSK cost-cutting drive to save £400m

Pharma giant GSK is embarking on a cost-cutting drive to save £400 million per year by 2021 as part of a “new major restructuring programme.”

It will mean reviewing its supply chain and reducing administrative costs.

The company – which has a major manufacturing base in Montrose – said savings from the restructuring programme will be used to ramp up spending on research and development and to support new products.

The pharmaceuticals group said it would take an £800m cash hit as a result of the programme’s implementation, and a £900m non-cash charge, over the course of the next three years.

The announcement came as GSK announced its second-quarter results, which showed group sales coming in flat at £7.3 billion, at actual exchange rates.

When adjusted for currently fluctuations, turnover grew 4%. It swung to a pre-tax profit of £614m for the period, up from a loss of £178m a year earlier.

Chief executive Emma Walmsley said GSK had delivered “encouraging results across the company” in the second quarter. She said: “With the recent new product launches, development of the new R&D approach and the successful buyout of the consumer business, we have evaluated the group’s cost base and what is required to deliver competitive long-term growth and performance in each of the group’s three businesses.

“As a result, we are today announcing a new major restructuring programme, which aims to significantly improve the competitiveness and efficiency of the group’s cost base with savings delivered primarily through supply chain optimisation and reductions in administrative costs.”

GSK shares closed down 14.54 at 1,542.26 following trading yesterday.

GSK chief executive Emma Walmsley.