LONDON: British pharmaceuticals giant GlaxoSmithKline on Wednesday launched a fresh drive to slash costs — by £1.0 billion ($1.3 billion, 1.1 billion euros).
The news came as the group said it had more than halved second-quarter net losses, aided partly by a pound weakened by Brexit uncertainties.
GSK, under newly-installed chief executive Emma Walmsley, will seek the latest round of cost savings by 2020 on the back of supply chain efficiencies and administration cutbacks.
The cash generated will be earmarked for funding new product launches, research and development, and for offseting price pressures.
“A key driver of the new savings will be through realising efficiency improvements in the group’s supply chain,” the company said.
“This will include changes to GSK’s manufacturing network, divestment and exit of more than 130 non-core brands, reductions in overheads, improved procurement savings and more strategic supplier relationships.”
GSK will seek also to prioritise its areas of business, with a particular focus on respiratory and HIV/infectious diseases, as well as oncology and immuno-inflammation.
Folllowing a review of research and development activities, GSK has decided to stop more than 30 pre-clinical and clinical programmes which are “unlikely to generate sufficient returns”.
The drugmaker revealed also a strategic review of its rare diseases unit that it will consider selling.
Last week, GSK announced plans to sell its Horlicks malt drink brand and shutter a factory in Slough, southern England, as part of an overhaul of its manufacturing base.
The company added Wednesday that losses after tax stood at £180 million in the three months to the end of June.
That marked a vast improvement from a loss of £435 million in the same period of the previous financial year.
“The second quarter was another quarter of progress for GSK,” said Walmsley, who took up the post in April.
“Our priority for the second half of the year is to maintain this momentum and prepare for the successful execution of several important near-term launches in Respiratory, Vaccines and HIV.”
Total sales soared 12 percent to £7.3 billion, buoyed by the weak pound following last year’s Brexit vote. However, growth stood at just three percent at constant exchange rates.
Since Britain’s 2016 referendum vote in favour of exiting the European Union, the pound’s value has slumped versus the dollar. That has weighed on GSK, which earns large sums in the US currency.