Glaxo Wellcome, the pharmaceutical giant, yesterday agreed to sell the rights to its new migraine drug to its rival Zeneca in a deal thought to be worth around pounds 100m.
The sell-off was forced on Glaxo by the Federal Trade Commission, the US competition watchdog, which believed the merged company would otherwise have dominated the market following last year's pounds 9bn takeover of Wellcome. The divestment also satisfies requirements laid down by the European Union trade authorities.
Glaxo said it had signed a memorandum of understanding concerning the sale of the rights and expected to complete the transaction by the end of the month, although negotiations have yet to be finally completed The FTC had given the company a deadline of 23 March.
The new drug, code-named 311C90, was being developed by Wellcome and would have been a second-generation product to Glaxo's highly successful Immigran, known as Immitrex in the US. Sales of Immigran were pounds 284m in 1994 and analysts believe that figure rose to pounds 330m last year. Glaxo was already developing its own improved migraine drug to rival 311C90, called Naratriptan, which it will keep. Observers expect the rapidly expanding market for migraine drugs could hit pounds 1.5bn by the year 2000.
The deal was generally welcomed yesterday. Jenny Colley, an analyst with NatWest Markets, said: "It makes sense for Glaxo and it makes sense for Zeneca. It will probably complement the schizophrenia product [Zeneca] have already got in that area. It makes good sense for Glaxo. Zeneca might have less marketing clout than other possible buyers."
Glaxo said it would ensure that the clinical trial development programme for 311C90 - currently in phase III clinical trials - continued without interruption throughout the divestment process. The plan is that Zeneca will pay milestone payments as development proceeds, with a gradual handover before an expected launch date for the drug sometime in the second half of 1997.