July 20, 2017
By Mark Terry, BioSpace.com Breaking News Staff
As reported yesterday, UK-based GlaxoSmithKline is selling off the UK part of its Horlicks malted milk beverage company, as well as its MaxiNutrition sports drink brand. More details are coming in about the overall restructuring plans the company has, in addition to shifts in manufacturing.
As part of the restructuring, GSK has halted plans for a biopharmaceutical manufacturing facility in Cumbria, UK, which was expected to cost 350 million pounds. The company indicates it no longer needs the manufacturing capacity. It is also considering selling its antibiotics business located at Ulverston, UK. That facility makes antibiotics such as Zinnat, Zinacef and Fortum.
The shift will involve outsourcing some of the company’s manufacturing activities from its site in Worthing in West Sussex. This is related to the sale of the MaxiNutrition brand, and will, over the next four years, eliminate—depending on the source—246 to 320 jobs. A spokesperson for the company said in a statement, “We are outsourcing some manufacturing from Worthing to an existing third partner and simplifying the site. These moves are necessary to improve productivity and overall business performance in a very competitive market. The proposals announced today would unfortunately mean the loss of 246 roles at Worthing over four years. Consultation will now begin on these proposals.”
GlaxoSmithKline insists the decision has nothing to do with the UK vote to leave the European Union, known as “Brexit.” A company spokesperson said it was to “improve the efficiency and competitiveness of its manufacturing network.”
The decision has some pushback, although how much remains to be seen. John Woodcock, the Cumbria area’s Labour MP, decried the decision and indicated he planned to hold an emergency meeting in the town today.
The company has reassured everyone that it plans to continue to invest in the UK. It expects to invest more than 140 million pounds over the next three years on expanding its manufacturing operations for respiratory and HIV drugs at its plants in Ware in Hertfordshire, Barnard Castle in County Durham and Montrose in Angus.
“We have a substantial manufacturing presence in the UK and continue to support the network with new investment of more than 140 million pounds in the next three years,” said Roger Connor, GSK’s president of global manufacturing and supply, to The Guardian. “At the same time, we have had to make some decisions which we know will cause uncertainty for some of our employees. We will do all we can to support them through this process.”
The antibiotics business GSK is considering selling is its cephalosporins brands. Their global annual sales are approximately $260 million (US), but are facing competition from inexpensive generics. The company has indicated it will continue to manufacture other antibiotics, including Augmentin, and will continue research and development into new antibiotics for antibiotic-resistant infections and emerging infections.
The Horlicks brand, which is 100 years old, is a malted milk drink marketed as a before-bedtime beverage. Sales have faded in the UK, but remains popular in India, where the company plans to continue selling it.
The MaxiNutrition sports nutrition brand is also up for sale. UK sales of Horlicks and MaxiNutrition are about 30 million pounds per year.
Investors and analysts are watching these moves closely. The company’s chief executive officer, Emma Walmsley, took over from Sir Andrew Witty in April, and has indicated she planned to focus on the company’s drug business. Investors had expressed concerns at her appointment because her background was in the company’s L’Oreal cosmetic business. She said at the time, “I want to make that [pharmaceuticals] more at the heart of where we spend our leadership time and what we spend our time talking about.”
Last year the pharmaceutical division brought in 16.1 billion pounds of the company’s 27.8 billion pounds of annual sales.
