Posted on May 6, 2009 at 9:03 AM
Filed under: Acquisitions | Best Practices | Case Studies | Corporate Strategy | Deal International | Divesting and Restructuring | Growth Strategy | Joint Ventures and Alliances | Trends
Tagged: Andrew Witty , Aspen Pharmacare , Biovail , GlaxoSmithKline , H1N1 virus , Pfizer , Piramal Healthcare , Shire plc , Stiefel Laboratories , Swine Flu , Valtrex , Wellbutrin

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As its first-quarter results were hammered by generic competition, GlaxoSmithKline plc (NYSE:GSK) chief executive Andrew Witty's game plan is to stay away from megamergers, expand in emerging markets and shift money from pharmaceuticals into vaccines and consumer businesses as more blockbuster drugs face generic competition. One such drug is its best-selling herpes treatment Valtrex, which faces patent expiration by year's end.

In order to invest in new products and upcoming launches, Glaxo announced on Wednesday that it's selling drug rights to antidepressant drug Wellbutrin XL to Biovail Corp. (NYSE:BVF) for £340 million ($510 million). Generic competition ate away at the drug's sales, knocking them down by 70% in the U.S. for the first quarter. Glaxo will retain rights to the drug outside the U.S., excluding Canada.

The Deal Pipeline notes the transaction is also in keeping with an apparent Biovail strategy to use acquisitions to bolster its portfolio. More on that here.

Since Pfizer Inc.'s (NYSE:PFE) $68 billion acquisition of smaller U.S. rival Wyeth, London-based Glaxo has been wheeling and dealing to diversify its business. Three weeks ago, it announced the acquisition of the world's largest independent dermatology company, Stiefel Laboratories Inc., for up to $3.6 billion.

Reports have surfaced that Glaxo's in talks to acquire a minority stake in South African generic drug maker Aspen Pharmacare Holdings Ltd. and that it may try to buy Indian generic drug maker Piramal Healthcare Ltd. In March, it hooked up with Shire plc to co-promote an ADD drug for adults. Glaxo also teamed up with Pfizer Inc. (NYSE:PFE) to create a world No. 1 company focused on research, development and commercialization of HIV medicines.

And from the current events table, Glaxo is working on swine flu (H1N1 virus) interventions. U.S. officials are being criticized for an overreaction to the potential pandemic, but the virus could lay dormant and re-emerge in a mutated state. Glaxo would certainly benefit from such an event. After a media blitz, investors were buying up shares. - Baz Hiralal

See the Glaxo-Biovail announcement

Also see:
    Three more pharma megamergers to go?



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