Wyeth in Gosport, which carries out chemical and pharmaceutical research, will be shut before the end of the year after a takeover.
The site in Barwell Lane is to be cut after US-based pharmaceutical giant Pfizer bought its rival for £40 billion l
ast month.
A spokesman from Pfizer told The News he was unable to rule out compulsory redundancies.
He added that it was hoped employees would be relocated to positions within Pfizer – but these could be as far away as America.
The news is a big blow for the town, which has more housing than jobs, forcing many to leave the borough to search for work.
Gosport council leader Councillor Mark Hook said: 'This is bad news for Gosport and it's bad news for the people whose jobs are affected. No time is good for compulsory redundancies, but it's even more difficult in the current climate.
'Any job that is lost on the peninsula potentially means someone having to commute out and that's not a good thing.
'We need to be protecting employment and creating jobs, rather than the other way around.'
Gosport MP Sir Peter Viggers added: 'Obviously it is a great disappointment – pharmaceuticals have been an important ingredient in Gosport's employment for many years.'
Management from Pfizer will go into talks with the employees at the site over coming days and within the next one to two months an announcement is set to be made about compulsory redundancies.
Andrew Thomas, spokesman for Pfizer, said: 'The site is going to discontinue.
'It affects about 40 colleagues and what we'd hope to do is look at those colleagues and look at what we can do for them and with them.
'I'd envisage some would move to other sites where research would continue, but some will obviously leave the company. Those numbers we haven't determined yet.'
When asked about compulsory redundancies Mr Thomas said: 'We haven't ruled anything out yet.'
He was unable to say when the company was planning to sell the site and how much it was expected to go for.
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