GSK swallows US heart drugs specialist Reliant for £800m

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The Independent Online

GlaxoSmithKline is to acquire the heart drug specialist Reliant Pharmaceuticals for $1.65bn (£800m) in a move aimed at boosting flagging sales in the US.

The main attraction for the drug giant in the deal is Lovaza, an omega-3 treatment for patients with high levels of triglycerides – fatty substances in the blood associated with increased risk of coronary artery disease. Lovaza is the only drug of its kind with approval from US regulators, and Reliant owns the US rights, which it licensed from the Norwegian company PronovaBioPharma.

Reliant, a privately owned US company, had been considering an initial public offering, which was expected to value the company at $1.34bn. The decision to sell highlights the hunger of major pharmaceutical companies which are gobbling up new products, often at higher valuations than a stock market listing would bring.

Analysts welcomed the deal and said it makes "good strategic sense", while cost synergies expected from the purchase mean that the company has not overpaid.

Shares in GSK were hit earlier this year after sales of its blockbuster drug Avandia slumped in the US following a report linking it to increased risk of heart attack.

Chris Viehbacher, president of the company's US division, said "the addition of Lovaza to the GSK portfolio adds a new driver of sales growth in the US business". He added that the drug would complement GSK's Coreg, a leading treatment for heart failure and hypertension. "It adds to our growing profile in the cardiovascular disease area," he said.

The deal would be slightly accretive to earnings in 2008, excluding integration costs, and would create additional value in following years, he added.

Reliant recorded net sales of $341m in the nine months ending 30 September, including $200m from sales of Lovaza, which grew 115 per cent.

The acquisition, which is subject to approval by the US Federal Trade Commission, is expected to conclude before the end of the year.

Reliant has focused on licensing and developing drugs rather than investing in products under the leadership of its chief executive Bradley Sheares.

Mr Sheares said yesterday it was a "momentous day" for Reliant, adding that the sales team had built a formidable Lovaza franchise in less than 24 months.

Reliant, which is based in Liberty Corner, New Jersey, markets three otherin-licensed cardiovascular products.

Tomas Settevik, chief executive of Pronova BioPharma, which is a world leader in making pharmaceuticals from fish oil, said the deal highlights the success of Lovaza. "Under Reliant's excellent sales and marketing operation Lovaza, which is based on Pronova BioPharma's active pharmaceutical ingredient (API), has already gained a significant US market position for the treatment of elevated triglycerides," he said.

Another company to benefit from the acquisition is the US-based biotechnol-ogy company Alkermes, which will receive up to $174m for its 19 per cent stake in Reliant, which it bought for $100m in 2001. The following year it announced plans to merge with Reliant, but the deal was called off.