GlaxoSmithKline plc is slashing costs and jobs in a new round of restructuring which shows the pressures building on big drugmakers as cheap generics eat into sales.

But the world's second biggest drug company said it had no intention of following market leader Pfizer Inc. in embarking on a new phase of mega-mergers.

In a surprise move, Glaxo also said it had decided not to give specific guidance on earnings for this year. The company said the decision was not connected to performance and was designed to focus investor attention on its long-term goals.

The British-based group now aims to achieve annual savings of €2 billion by 2011, up from 0.5 billion estimated previously.

Glaxo did not spell out the number of jobs it would cut as a result but analysts expect thousands more positions to be shed from a global workforce of around 100,000.

Its expanded cost reduction programme is the latest in a series of cutbacks across the sector.

AstraZeneca plc last week announced 6,000 job cuts and Pfizer, which has agreed to buy Wyeth, plans to cut 15 per cent of the combined workforce, or about 19,000 jobs.

Glaxo's fourth-quarter sales rose 16 per cent to €7.8 billion, flattered by a weak British pound. But earnings per share before major restructuring costs were hit by big legal charges, rising only nine per cent to 26.7 pence.

"We got a bit of a bombshell in terms of them not giving guidance ... but it appears to be a general policy. They are moving to a more opaque guidance perspective for the market, probably to give themselves some breathing room," said Jeffrey Holford, an analyst at stockbroker Jefferies.

Glaxo's decision follows poorly received outlook statements from European rivals AstraZeneca, Roche Holding AG and Novartis AG this week and last.

Simon Mather, an analyst with WestLB, noted some key product lines - including Advair for asthma and respiratory disorders, vaccines and non-prescription remedies - had performed better than expected.

Drugmakers are struggling to defend profit margins in the face of a wave of patent expiries. With few new medicines emerging from research labs and sales of blockbusters evaporating, the industry simply cannot sustain its current size, analysts say.

Glaxo itself faces cheap generic competition to a range of products, such as Lamictal for epilepsy and Wellbutrin for depression.

One option for large manufacturers is to merge and strip out costs, as Pfizer plans to do with Wyeth. But Glaxo chief executive officer Andrew Witty rejected this approach.

"There is no way we are going to be distracted by large-scale M&A within the pharmaceutical sector - that's not for GlaxoSmithKline," he told reporters.

Instead, he plans to look at small and medium-sized deals to build Glaxo presence in emerging markets and consumer health.

Because the group sells the vast majority of its products abroad, it is currently basking in the effects of the pound's sharp fall.

Sterling's slide is expected to continue to flatter reported results this year but Mr Witty, who took over last year, has his eye on underlying margins excluding currency effects.

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