MPs criticise failure of drug merger

Drugs link: SmithKline and Glaxo are ticked off, but a committee report says they should merge

TOP management at SmithKline Beecham and Glaxo Wellcome were seriously criticised by MPs in a report published yesterday for the way they abandoned a planned mega-merger in February.

In addition, the House of Commons Science and Technology Select Committee has signalled its support for any future tie-up between the two drug company giants.

The stock market has been awash with rumours that merger talks are again on the agenda. The companies have either denied the moves or refused to comment on them.

The committee, chaired by Dr Alan Williams, initially decided to examine the planned merger as it feared that the UK's research and development base would be damaged. Ironically, it concluded that a merger would have been a good thing, creating a national champion that would actually help secure domestic jobs and expertise.

But the committee's report is critical of the manner in which the talks broke down. It says: "The judgement of senior executives must be called into question. They readily embarked on an adventure with national assets, and then equally readily abandoned the enterprise less than a month later without a clear cause consistent with claimed advantages."

It believes that neither Glaxo's executive chairman, Sir Richard Sykes, nor SmithKline's chief executive, Jan Leschly, has been properly called to account for the merger failure.

The committee said the two men gave contradictory reasons why the talks broke down, but it remained unconvinced that management styles and philosophies were so different as to be irreconcilable.

Glaxo hit out at the report, saying its conclusions were "surprising" and "disappointing", but SmithKline was broadly supportive. It said: "We endorse the position taken by the committee in stating that it was better for both companies to remain separate than for the merger to have proceeded without producing the desired returns." It repeated its view that Glaxo broke the fundamental principle that it was a merger of equals.

While speculation has mounted that talks might soon begin again, Glaxo sources say the company would only proceed if Mr Leschly is removed.

Mr Leschly told a seminar organised by London's City University Business School that he was "appalled" at speculation that he would resign over the failed merger under pressure from shareholders.

"I have no intention of resigning and I am appalled at these rumours. I have tried very hard to maximise shareholder value. Why should I consider resigning?"

Outlook, page 19

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test