THE growth plans of GlaxoSmithKline were back under the microscope amid reports it had held tentative merger talks.

The world's second largest drugs company, which employs about 1,500 people in Barnard Castle, is being linked to US rival Bristol-Myers Squibb, although both parties have declined to comment.

It has been reported in the US that executives from each company have held meetings at Bristol-Myers offices in the past fortnight.

So far, the negotiations have been exploratory and focused on whether a GlaxoSmithKline acquisition of Bristol-Myers could be a viable proposition.

It is thought a tie-up would ease concerns that the pair do not have enough products to make up for those about to lose patent protection.

Analysts in London view the prospect of a Bristol-Myers takeover as likely, although they are unconvinced that it will be by GlaxoSmithKline.

Justin Urquhart Stewart, of Seven Investment Management, said: "It's a question of whether they want to take on the risks of Bristol-Myers.

"The logic will be because they can put more of a potential pipeline together but Glaxo won't want to inherit the problems of Bristol-Myers."

Andrew Pendrill, of ABN Amro, said regulatory issues could also hamper any deal: "Bristol-Myers has always been viewed as a possible target for Glaxo but the likelihood is practically zero."

Glaxo is the second biggest stock in the City and was formed by the merger of Glaxo Wellcome and Smith-KlineBeecham two years ago.

Glaxo had made a strong start to the year after a healthy rise in sales in the US. It wants to trim its Barnard Castle workforce by 400 in the next two years. About 180 volunteers have so far been accepted for redundancy.