Will this formulation be a job purgative?

• Position: Glaxo Holdings PLC merges with Burroughs Wellcome PLC

When Glaxo Holdings PLC merged with Burroughs Wellcome PLC in 1995, it led to massive layoffs and cost cutting. London-based Glaxo Wellcome PLC is merging again, this time with London-based SmithKline Beecham PLC. The deal creates a $25 billion behemoth, the world's largest maker of prescription drugs.

Speculation about its impact has hung over the Tar Heel drug industry since the deal was announced in January 2000. Will this be a true merger of equals, as the companies say, with two global operational headquarters -- one in Philadelphia and the other in Research Triangle Park -- and a corporate headquarters in London? Or will one company dominate?

The new union features Glaxo's name first, and its shareholders own 59% of the company. But CEO Jean-Pierre Gamier comes from SmithKline and lives in Philadelphia. Glaxo's former CEO, Bob Ingram, is COO and lives in North Carolina. Each will have an office in Philly and RTP, but Glaxo SmithKline will have fewer offices overall. As many as 10% of its 107,000 jobs could be cut.

If Glaxo sheds many jobs in the Triangle, don't expect pharmaceutical and contract-research organizations there to shed tears. Many will welcome the castoffs. And layoffs could boost the local economy another way. After the Burroughs Wellcome merger, many former Glaxo executives started new companies and consulting firms, including Durham-based Triangle Pharmaceuticals Inc., which is chasing better treatments for AIDS.

But this merger differs from the earlier one in two important ways. The companies don't have significant overlap in product lines, which could minimize job cuts in RTP. Glaxo focuses on prescription drugs, especially for asthma and migraines. SmithKline focuses on vaccines and over-the-counter products. And, unlike last time, Glaxo won't give severance packages to employees who leave voluntarily. Generous payments following the Burroughs Wellcome merger helped support former executives as they started new companies.

While they waited for the merger to close, Glaxo employees managed to grow revenues 11% through three quarters of 2000. The company took a blow when Lotronex, a drug for irritable-bowel syndrome, was pulled off the market after complaints of serious side effects and deaths among users. A new asthma treatment, on the other hand, performed well overseas and is expected to reach the U.S. market under the name Advair this year.

Though it's too soon to tell what this chapter of the Glaxo saga means for...