Haleon brings in McKinsey and EY for cost-cutting exercise

08 September 2023 Consultancy.uk

A year after splitting from GlaxoSmithKline, pharmaceutical firm Haleon has brought in consultants to help cut costs. The firm had been valued at almost €35 billion when it gained independence, but the appointment of McKinsey & Company and EY professionals is already the second time since then that Haleon has resorted to restructuring.

After the pandemic, the demand for healthcare and pharmaceutical products has remained relatively high. Numerous reports cite the sectors as bucking a wider downward trend in the M&A market, as buyers look to cash in on those solid fundamentals. But the troubled year of Haleon suggests the picture is more complicated than that.

In the summer of 2022, Haleon split from consumer-healthcare giant GlaxoSmithKline (GSK) to remarkable fanfare. When the firm was placed on the stock market to attract funding, it was Europe’s biggest listing in 20 years – with Haleon valued at nearly €35 billion. In the months since, though, the firm’s share price has fluctuated dramatically.

Haleon brings in McKinsey and EY for cost-cutting exercise

Haleon is best known for brands such as Sensodyne toothpaste, nicotine craving products Nicotinell, and Advil and Panadol painkillers. It employs 24,000 people globally, with 1,700 staff based in the UK.

In August, staff were briefed on a wave of redundancies across its operations, amid a series of meetings, and a consultation process. Reports by The Guardian suggested that some people would be offered other roles in the company, while those who were laid off were expected to leave Haleon from September.

Now, though, the Sunday Times suggests that Haleon has called on several consulting firms to deliver additional savings. Strategy consultancy McKinsey & Company – which often is deployed by major organisations looking to downsize their headcount – is understood to be drawing up plans a broader cost-cutting programme aimed at saving £300 million in the next three years; with Big Four firm EY on hand to assist in its execution.

The news was announced ahead of Haleon’s half-year results, which analysts expected would see profits down slightly on before the GSK split. Haleon reported £3 billion in revenues in May 2023, but has struggled under the pressure of rising inflation.

It is unclear where job cuts are likely to fall, but the reduction could be in the hundreds. Asked for comment by the Sunday Times, a Haleon spokesperson said that as it entered the consultation process, the firm was "fully committed to supporting colleagues who may be impacted".