GlaxoSmithKline's Witty says manufacturing must become more efficient

To deal with an increasingly difficult European market, GlaxoSmithKline ($GSK) CEO Andrew Witty says the company must make its manufacturing more efficient.

He gave no specifics during his speech in Brussels last week, reported by Bloomberg, but he said the company must improve plant use over the next two or three years. The company has given some hints in earlier discussions, however, saying it is aligning manufacturing with the hottest markets, much like fast-moving-consumer-goods companies do.

GSK spokeswoman Sarah Spencer told FiercePharmaManufacturing in an email that Witty's comments do not refer to any plant closures or job reductions but refer only to process efficiencies that can be made "within the existing network to become even more productive."

Witty pointed out that GSK has already cut its sales force by about half in the last four or 5 years, saying the company is "more or less the right size." But he said the European market, with price cuts by governments, has been more difficult than expected and that nothing has improved from the first quarter, when sales in Europe receded 6%, the news service says. Witty was speaking at the annual meeting of the European Federation of Pharmaceutical Industries and Associations, of which he is president.

Glaxo is actually expanding its manufacturing footprint in its home country. In March, Glaxo announced that it would build a £350 million ($463 million) plant in Ulverston, U.K., and invest another £230 million ($304 million) at the other three sites in the country. The new manufacturing plant in Ulverston, in Cumbria, is the first new manufacturing facility for GSK in the U.K. in nearly 40 years.

In a conference call with investors in February, CFO Simon Dingemans discussed how by "simplifying the manufacturing footprint" to align that footprint more tightly to the three main businesses--vaccines, pharma and consumer--it was taking days out of its supply chain time. Creating a single end-to-end supply chain, "much like you would find in any of the major FMCG companies around the world" allows the company to drive the speed of response, drive the costs lower and particularly to drive cash and the working capital out of the process, he said.

 - read the Bloomberg story