Drug Firms Merge HIV Arms
posted: 17/04/2009
Glaxo-SmithKline (GSK) and Pfizer are to merge the HIV arms of both these international drug companies, in a move to better develop and market HIV drugs. This follows an announcement in February that GSK was going to reduce the prices of its drugs, including those for HIV, across the developing world.
Britain's biggest drugs company, GlaxoSmithKline, is to pool resources for treating HIV with its USA rival Pfizer, in a bid to reinvigorate financial returns from tackling the global epidemic.
GSK and Pfizer announced that they intend to create a new company, headquartered in London but as yet unnamed, to manage their HIV operations with initial working capital of £250m.
The lion's share of the business will be owned by GSK, which will take 85% to reflect its portfolio of big-selling HIV drugs such as Combivir and Kivexa. The other 15% will go to Pfizer, which will contribute potentially promising new treatments.
Delivering new drugs
GSK's chief executive, Andrew Witty, said the "clear focus" of the joint venture would be in delivering new drugs to build on what he described as the drugs industry's remarkable success in tackling HIV over the last two decades.
Witty recalled that as recently as 1990, it was extremely difficult to conduct clinical trials in HIV because people rarely lived long enough to complete studies. He said: "I think it's one of the finest performances of the pharmaceuticals industry to have transformed an incredibly frightening infectious disease into something more manageable."
The new company will have 11 drugs on the market and a further six in clinical development. It will have a market share of 19% and annual sales of £1.6bn.
Once the global leader in HIV drugs, GSK has slipped to second place behind a USA rival, Gilead, and has seen sales stutter. Revenue from GSK's HIV treatments fell by 5% to £1.5bn last year, while sales of the company's entire pharmaceuticals portfolio slipped 3% to £20.3bn. It has few new HIV drugs in the pipeline, but Pfizer has several.
Pfizer has a relatively newly launched HIV drug, Selzentry, and is working on several more in trials.
"Both companies are facing some pressures in the HIV area," said Damien Conover, an analyst at the Chicago research firm Morningstar. "Selzentry is not doing as well as it probably could if it had more resources behind it."
Cautious welcome
Charities supporting people living with HIV greeted the tie-up with cautious optimism. Sir Nick Partridge, chief executive of the Terrence Higgins Trust, said his organisation "welcomes any move which will strengthen HIV research and development and benefit people living with HIV".
Partridge said that 33 million people lived with HIV worldwide: "We need to be making constant advances to stay one step ahead of the virus."
The new company will be run by Dominique Limet, a former head of GSK's French operation who presently runs the group's personalised medicine strategy.
Under the arrangement, either GSK or Pfizer could be rewarded with a greater ownership stake depending on whose laboratories come up with promising treatments in the future.
GSK's chief executive Witty, who is sceptical about multimillion-dollar mergers among drugs firms, suggested that this tie-up could be an example of how collaboration could be made to work elsewhere in future. "It's not necessarily a template but it will apply elsewhere," he said. "This structure is a good example of the way we want to create value and generate efficiency in our business."
He pledged that the new company would adopt "enlightened mindsets" towards the pricing and availability of HIV drugs in sub-Saharan Africa and other developing countries.
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