Glaxo SmithKline defers merger with Burroughs Wellcome

Our Corporate Bureau
09 December 2002

“The GSK management believes that the ongoing tussle with the Burroughs employees’ union is not likely to be resolved soon. The involvement of an outside union in the wage disparity issue between GSK and Burroughs employees has further intensified the union’s fight over the issue. The only remaining option for the company is to sell the Burroughs plant and the related real estate to a third party. Burroughs being a GSK subsidiary, the company has the right to sell the Burroughs’ properties,” say sources close to the development.

Though the operational merger of Burroughs with GSK happened in early 2002, the legal merger of these two entities is yet to take place due to the wage disparity between GSK and Burroughs employees. Subsequently, the Burroughs employees’ union approached the labour court to settle the issue. There is a 40-per cent wage disparity between GSK and Burroughs employees.

Says a senior GSK official: “We are fully engaged with the disposal of our Ankleshwar facility in Gujarat which was sold to Glenmark Pharma two weeks ago. Now Burroughs is next on our agenda. But no final decision has been taken so far.”

The sources say following the Indian merger of Glaxo and SmithKline, the wage structure of Glaxo employees witnessed an upward revision. Subsequently, the wage disparity between Glaxo and Burroughs employees has come down from the earlier 40 per cent to 20 per cent.

The sources add that the sale of the Mulund facility assumes more significance because GSK globally follows an international practice of moving its manufacturing facilities away from densely populated areas.

The residential population in Mulund is high compared to the industrial population. Currently GSK has five manufacturing facilities in India — four formulation n facilities in Nasik, Mysore, Bangalore and Mulund, and a bulk drug facility in Thane.