Witty backs Britain as manufacturing, R&D location
pharmafile | July 29, 2011 | News story | Manufacturing and Production, Research and Development |Â Â GSKÂ
GlaxoSmithKline chief executive Andrew Witty has promised to expand operations in the UK in both manufacturing and R&D, saying that changes to the tax system have made the country more attractive.
“What we want to do is have more manufacturing and do more R&D work in Britain,” said Witty, adding that the group would be a “net hirer of personnel” in the country.
Witty’s remarks – made on the occasion of GSK’s second-quarter results when it reported underlying sales up 5% – come as a restructuring programme spanning more than three years is coming to an end.
On the manufacturing side, GSK started the restructuring programme with 111 factories, cut that down to 65, and added another 12 through acquisitions, said Witty.
Giving insight into this process, he noted that a review of its recently-acquired Stiefel dermatology unit reduced the number of products on offer by 12%, cut formulations by 24% and reduced packaging complexity by 75%.
“That has allowed us to close four of the five factories that Stiefel used to run,” said Witty, adding that it has also helped it to get ahead of its cost-savings targets for the acquisition.
Overall, GSK expects to achieve an additional £300 million in savings across the organisation in 2012, bringing the total for the restructuring programme to £2.5 billion since its inception.
Restructuring also means that GSK has fewer R&D facilities, and fixed R&D costs have also come down with a 27% reduction in headcount over the last three years. GSK as a whole is carrying out “relatively less in discovery and much more in full development” than a five years ago, with around half of discovery now carried out externally, said Witty.
The drugmaker is now in a position to think about building capacity again, and the UK is the beneficiary of an already-announced new biopharmaceutical manufacturing facility, with two sites in Scotland and two in England in the running for the £500 million investment budget.
Some production operations formerly outsourced to India are being brought back to the UK, and the company also says it plans to open a shared services centre in the country, he said.
Witty recently said that the West is now able to compete with the East in manufacturing provided companies get process efficiency and capacity utilisation right.
Phil Taylor
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