Half of the planned job losses will fall in Britain, where the company has been involved in a furious row over the Government's expected refusal to allow Glaxo's new `flu drug Relenza' to be paid for out of national health coffers.

Glaxo said the restructuring was expected to generate annual cost savings of around 370 million pounds by 2003, and would cost 520 million pounds spread over four years. One third of this will be charged against 1999 earnings.

The moves are aimed at reducing the group's cost base and protecting its profit margins, which are among the highest in the business.

The need for serious cost-cutting was given futher impetus in July when Glaxo shocked the market by saying it would not meet its 1999 targets of double-digit sales and profit growth, leading to a sharp fall in its valuation.

Executive chairman Richard Sykes said the plans followed a year-long review.

``Their implementation is vital to sustaining and strengthening our competitive position in the rapidly changing global pharmaceutical industry, as well as enhancing our ability to bring efficiently and effectively new and improved medicines to patients throughout the world,'' Sykes said.

The group said the moves would be earnings enhancing by 2000.

Details of where job losses would fall outside the UK were not immediately disclosed, although secondary manufacturing -- producing finished products such as tablets and packaging them --- will take the brunt.

Glaxo has major operations in the US, Brazil, Singapore, France and India, as well as numerous smaller plants scattered around the globe.

Some 1,700 manufacturing posts are to go in Britain out of atotal of 8,250. The group will phase out secondary manufacturing at Dartford in southern England over four years, losing 1,500 jobs, although it will continue primary manufacturing of chemicals and additives at the site, retaining 1,000 posts.

Another 200 posts will be lost at its site in Speke, near Liverpool.

Shares in Glaxo were up 13 pence or 0.82 per cent at 16.01 pounds after the announcement, which was broadly in line with analysts' expectations.

Although the group has been planning its announcement for several months, the timing is likely to increase tension between Glaxo and the British Government in the wake of the spat over Relenza.

Sykes wrote an angry letter to UK Health Secretary Frank Dobson at the weekend which included a thinly veiled threat to pull out of Britain after a Government advisory committee appeared to come out against allowing Relenza to be subsidised by the state.