Little overlap, but jobs will go shed

Sir Richard Sykes, Glaxo's chief executive, said product lines as a whole were complementary and there were no significant overlaps between the two companies. At the same time, he saw substantial scope for rationalisation of laboratories, sales and marketing, and confirmed a number of laboratories would close.

It was "inevitable" that laboratories would be rationalised because there was a lot of duplication, but he refused to put numbers on likely job losses.

Glaxo claimed there were many areas where there were significant synergies between the two companies' products, such as Glaxo's Aids drug, 3TC, and Wellcome's Retrovir and Mepron. These can be used together in combination therapies that are increasingly favoured for treating the disease.

Sir Richard said there were four product lines in a combined company that would each produce more than $1bn of sales a year. These were treatments for gastro-intestinal disorders such as ulcers, respiratory drugs, anti-viral drugs and antibiotics.

In research, he said Glaxo would be looking at the two companies' programmes and finding the best way to put them together.

The strategy was to set a clear objective of developing better medicines and then setting up methods of getting those to the patients, he added.

The City not only accepted Glaxo's claims about the scope for rationalisation, but pointed to new areas for savings.

Peter Laing, an analyst at Salomon Brothers, highlighted a key difference between the two companies. Wellcome does most of its manufacturing in Britain and the US.

Glaxo, by contrast, does most of its manufacturing in Singapore and Puerto Rico, which have low tax regimes and are much cheaper. So the scope for job cuts in Britain and the US and relocation to the Third World are massive, quite apart from the savings from combining sales and marketing in Europe and the US.