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Corporate Responsibility Report 2008

Restructuring

In October 2007, we announced a three-year Operational Excellence programme to improve the effectiveness and productivity of our operations. We launched the programme as a response to a more challenging business environment and forecast that it would deliver annual pre-tax savings of up to £700 million by 2010. In February 2009 we announced an expansion to this restructuring programme, to realise increased pre-tax annual savings of £1.7 billion by 2011. In 2009, savings from restructuring will mitigate the decline we expect to our gross margin due to product mix changes with a higher percentage of sales generated from vaccines, Consumer Healthcare and Emerging Markets, and support further investment behind our strategic priorities.

The programme includes initiatives to streamline manufacturing, adapt our selling model and improve efficiency in R&D. We are very conscious of the effect this programme will inevitably have on our employees and if options exist where we can achieve our financial goals and preserve jobs we will do everything we can to do so. We consult with employees and their representatives before we implement measures that affect them, such as outsourcing, site closures and staff reductions. We always speak to affected employees first (except where local regulations do not allow it) and then our works councils, trade unions and other employee representatives as appropriate.

We aim to treat our employees with dignity and respect and offer a wide range of support for all affected employees. This includes a competitive severance package and outplacement support such as assistance in finding alternative employment, career counselling and retraining. We also work hard to maintain the morale of all other employees at GSK.