GlaxoSmithKline will slash its costs by £1.0 billion
London - AFP
GlaxoSmithKline will slash its costs by £1.0 billion after posting slumping quarterly profits because of poor US sales, the British pharmaceutical giant said on Wednesday.
Costs will be cut by the equivalent of $1.6 billion or 1.3 billion euros after GSK posted profit after tax of £401 million in the third quarter.
That was down 59 percent compared with the outcome for the July-September period in 2013.
GSK added in its earnings statement that the group continued to work on an Ebola vaccine.
However it repeated that this would not be ready for commercial use until late 2016 and should therefore not be seen as the answer to the current outbreak in West Africa.
The company announced also that it intends to launch a partial stock market flotation of its ViiV Healthcare division, which develops treatments for HIV.
GSK is meanwhile looking to move on from a damaging scandal, which resulted last month in a Chinese court fining the company about $490 million over alleged bribery.
The firm's former head of China operations, Mark Reilly, and four other ex-officials were given suspended sentences of between two and four years in prison.
The adverse impact of the probe, along with weak trading in the United States, caused GSK to slash its 2014 profits forecast earlier this year.
Speaking on GSK's cost-cutting drive, chief executive Andrew Witty said in the statement: "We intend to refocus our global pharmaceuticals business and cost base following the divestment of our oncology business and the changed dynamics we now face in the US respiratory market."
He added: "This new restructuring programme will rescale commercial operations, global support functions and relevant research and development/manufacturing across pharmaceuticals.
"Approximately £1.0 billion of new annual cost savings are expected over the next three years, with around 50 percent delivered in 2016," Witty said.
GSK noted that group turnover dropped ten percent to £5.65 billion in the reporting period.
And sales of its best-selling drug, asthma treatment Advair, sank 13 percent owing to fierce competition and price pressures in the United States.
GSK in April announced plans to sell its oncology business to Novartis for $16 billion while buying also the Swiss company's vaccines division in return.
The British group meanwhile continues to explore the sale of certain mature drugs in Europe and the United States.
On Ebola, Witty added: "With the current pressing public health emergency caused by spread of the Ebola virus in West Africa, I want to report to shareholders that we are working hard to develop a potential vaccine.
"This is still at an early stage, but we are grateful for the support of all our partners, including the WHO, to expedite development of this candidate vaccine."
GSK last month said that Royal Bank of Scotland chairman Philip Hampton will become its chairman by next September after replacing incumbent Chirstopher Gent.