DRUG MERGERS: Glaxo, SmithKline Strike a Deal
Britain's SmithKline Beecham and Glaxo Wellcome agreed to merge, creating Glaxo SmithKline, the world's largest pharmaceutical manufacturer, company officials announced Monday. The new firm, which will be headquartered in London and operationally based in the United States, will be valued at $182.4 billion and will hold a 7.3% share of the world drug market (Stanley, AP/Nando Times, 1/17). Based on 1998 figures, annual sales of Glaxo SmithKline could total as much as $24.9 billion, granting the company a position of "global leadership in vaccines and in the treatment of disease ranging from AIDS and asthma to migraines," the Wall Street Journal reports. Under the agreement, Glaxo will acquire SmithKline through a $75.7 billion "stock swap." The new company will be headed by SmithKline executive Jean-Pierre Garnier as CEO and current Glaxo Wellcome chair Sir Richard Sykes as "part-time nonexecutive chair." Current Glaxo Research & Development head James Niedel will serve as chief science and technology officer, and Glaxo CEO Robert Ingram will preside over the new company's worldwide pharmaceutical operations (Moore/Waldholz/Raghavan, 1/17).
Given Glaxo's strength with the anti-migraine drug Imitrex and anti-asthma and anti-HIV treatments, and SmithKline's success with vaccines, the anti-depressant Paxil and new diabetes treatment Avandia, the merger "makes sense" according to many industry analysts. Experts note that the "two companies have complementary drug portfolios, and their merger would let them pool their research and development funds and give the combined company a bigger sales and marketing force," the AP/Nando Times reports (1/17). London analyst Franc Gregori of BNP Paribas said, "You've got the making of a supercompany that will have critical economies of scale" (Sorkin, New York Times, 1/15). The Federal Trade Commission and European Union still must approve the merger (AP/Nando Times, 1/17).