Glaxo, Google, Morrisons: Business news in brief, Tuesday 2 August 2016

Google and GlaxoSmithkline announce medical joint venture; Morrisons cuts prices by 18%

Gsk has announced a pioneering collaboration with Google to harness the power of bioelectronics to tackle chronic diseases (Fiona Hanson/PA)

Glaxo and Google form £540m bioelectronic medicines joint venture

GlaxoSmithKline, the UK’s biggest pharmaceutical business, is forming a joint venture with Google parent Alphabet’s life sciences business to explore using electrical signals to treat diseases.

Glaxo will hold a 55 per cent stake in the venture, called Galvani Bioelectronics, and Alphabet’s Verily Life Sciences will hold 45 per cent, according to a statement on Monday.

The companies will invest up to £540m over seven years.

Glaxo is seeking new sources of revenue growth as its blockbuster respiratory treatment Advair faces the threat of competition from generics in the US.

Bioelectronic medicine is a new field that aims to tackle chronic diseases using miniature, implanted devices that modify electrical signals that pass along nerves in the body.

Glaxo’s researchers are betting conditions like arthritis, diabetes and asthma could be treated using these devices, and the first such medicine may be ready within a decade.

Verily aims to develop software and hardware for the healthcare field. It is one of Alphabet’s most important new ventures, residing in the tech giant’s Other Bets division alongside smart-home device maker Nest and fast internet service provider Fiber.

In the second quarter, Other Bets generated $185m (£140m) in revenue and Ruth Porat, Alphabet’s chief financial officer, said that mostly came from Nest, Fiber and Verily, in that order.

Shares of Glaxo have climbed 23 per cent this year.

Verily has worked extensively with traditional pharmaceutical companies on projects such as developing smart contact lenses that can measure glucose with Novartis and helping Biogen study the progression of multiple sclerosis with sensors and data analysis tools. In December, it funded a robotic surgery company with Johnson & Johnson.

Verily will bring its expertise in the miniaturisation of low power electronics and device and software development. Initial work will center around inflammatory, metabolic and endocrine disorders, including type 2 diabetes.

Kris Famm, Glaxo’s vice president of bioelectronics R&D, was appointed president of the Galvani joint venture.

The idea is to create implants the size of a grain of rice, or smaller, that can be bolted onto nerves to treat diseases, augmenting or replacing drugs.

© Bloomberg

The Hinkley Point nuclear plant in Somerset (Getty)

China disputes ‘unwanted accusations’ and calls for EDF nuclear project to proceed

China on Monday called for Britain to proceed with the Hinkley Point nuclear power plant partly invested in by a Chinese firm, saying the project had firm support from London.

The plan by France's EDF to build two reactors with financial backing from a Chinese state-owned company was championed by David Cameron, as a sign of Britain's openness to foreign investment.

But just hours before the contract was due to be signed on Friday, Greg Clark, the business and energy secretary, said the Government would review the project again.

May was concerned about the security implications of a planned Chinese investment in the nuclear plant a source said on Saturday.

“I would like to stress that this project was agreed upon by China, Britain and France in the spirit of mutual benefit and cooperation, and win-win cooperation,” said Hua Chunying, a spokesperson for the Chinese foreign ministry.

China “hopes that Britain can reach a decision as soon as possible”, she added, without elaborating.

Britain and EDF first reached a broad agreement on the project in 2013. China got involved two years later when Downing Street laid on a state visit for President Xi Jinping, designed to cement a “Golden Era” of relations between the two countries.

China's official Xinhua news agency said while China understood and respected Britain's requirement for more time to think about the deal, it would not tolerate “unwanted accusations” from Britain, a country that cannot risk driving away investors as it looks for post-Brexit trade deals.

The project would create thousands of jobs and generate much needed energy following the closure of coal-fired power plants, Xinhua added, dismissing fears China would put “back-doors” into the project.

“For a kingdom striving to pull itself out of the Brexit aftermath, openness is the key way out,” it said.

“If history offers any guide, many China-targeted suspicions have been boiled down to diffidence and distortion. China can wait for a rational British government to make responsible decisions, but can not tolerate any unwanted accusation against its sincere and benign willingness for win-win cooperation.”

This “will surely stain its credibility as an open economy and might deter possible investors from China and other parts of the world in the future”, it added.

© Reuters

Morrisons reductions are the latest round of s supermarket price war (Getty)

Morrisons cuts prices by 18% to counter Brexit fears

Morrisons is cutting the prices of 1,045 items by an average of 18 per cent in a bid to combat fears that the UK’s vote to leave the European Union will lift shoppers’ bills.

The reductions are the latest round in a price war among Morrison and the other major supermarket chains — Tesco, Sainsbury’s and Asda — which are fighting competition from discounters Lidl and Aldi.

It’s at least the third major round of cuts this year by Morrison.

Since the 23 June vote to leave the EU, which prompted a plunge in the pound, consumer confidence has fallen on concerns that retailers would raise prices in response.

UK grocers import fresh produce and other items from the eurozone, which now cost more in sterling.

About 40 per cent of the food bought in British supermarkets is imported, according to researcher Kantar Worldpanel.

“We are constantly listening to our customers and know they are concerned about whether food prices will go up following the Brexit vote, especially on imports,” Andy Atkinson, Morrison’s customer and marketing director, said in a statement Monday.

The vote for Brexit hasn’t yet changed prices at UK supermarkets or the amount shoppers are putting in their baskets, Kantar has said.

After Morrison’s cuts, the price of its part-baked white rolls will fall to 54p from 62p, while a four-pack of Branston baked beans will be reduced to £1.50 from £2, the company said.

Morrison’s shares fell 2 per cent to 182.05p at 12:30am in London, trimming their gain this year to 22 per cent.

© Bloomberg

30 per cent of Burberry’s sales go to the Asia-Pacific region (Getty)

Burberry buys Chinese business for £54m

Luxury goods maker, Burberry, has acquired the remaining 15% economic interest in its China business held by Sparkle Roll Holdings, a non-group company.

The £54m purchase now gives burberry 100% economic interest in the group's business in china.

30 per cent of Burberry’s sales come from the Asia-Pacific region, in-line with peers in the sector.

Sales slid in the first quarter of the year as growth in China slowed and high-spending shoppers pared back on expensive purchases.

Burberry’s shares lost a third of their value since they hit a high in early 2015 but have rebounded since the EU referendum.

The company incurs 40 per cent of its costs in the UK but sells the majority of its products in other currencies meaning sterling’s fall in value has benefited the company.

Russian politicians have expressed concerns about Niantic's Pokemon Go app (Getty Images)

Kremlin to unveil rival Pokemon app amid security concerns

More than a million people in Moscow are playing Pokémon Go, a phenomenon that is worrying Kremlin officials. The game isn’t supposed to be available in Russia.

Despite attempts by app developer Niantic to manage global demand, fans in Russia and elsewhere have taken special steps to track down and install Pokémon Go before it’s released officially.

Corporate giants in Russia are trying to capture some of the excitement and drive people into their stores.

VimpelCom, the country’s third-biggest mobile carrier, said retail staff will teach customers how to get around region blocks to download the game.

Sberbank, the country’s largest lender, has purchased items in the app to lure the game’s creatures to locations near 29 branches in large cities, boosting traffic of younger clients.

Russia’s government has not been so welcoming. Evgeny Fedorov, a Russian politician, warned in an online post that Pokémon Go could help assemble political protests.

Moscow said it plans to release a Pokémon-like mobile app in August.

People will be able to walk the city and take selfies with 3D images of Ivan the Terrible, poet Alexander Pushkin and astronaut Yuri Gagarin, according to city officials.

© Bloomberg

Trinity Mirror profits up 42% after Local World deal

Newspaper publisher Trinity Mirror said first-half adjusted profit rose 42 per cent after it bought regional newspaper publisher Local World and tightly managed costs in a tough print advertising market.

Shares in the group, which publishes the Daily Mirror and Sunday Mirror, were trading up 6 per cent on Monday as the results beat its expectations and the group announced a £10m share buyback.

The company, which acquired Local World in November, reported adjusted pre-tax profit of £66.9m for the 27 weeks to 3 July on revenue 30 per cent higher at £374.7m.

The company said the trading environment was volatile in the period, and it saw no more stability in the remainder of the year, in particular because of macroeconomic uncertainty created by the vote for Brexit.

On a like-for-like basis, revenues fell 7.8 per cent, which analysts said indicated a more than 10 per cent fall in print advertising revenue in the second quarter.

The company said group like-for-like revenue had fallen 9 per cent in July.

© Reuters

Sainsbury's to double products available online in China

Sainsbury's, Britain's second-biggest supermarket group, said it would double the number of products it sells in China via the Alibaba Tmall online marketplace following a trial that started last year.

Sainsbury's said on Monday that its expansion on Alibaba will mean it sells over 100 branded products in the breakfast, drinks, organic and baby categories, with plans to add more ranges later this year.

“Chinese online shoppers are increasingly demanding high quality international products,” John Rogers, chief financial officer, said in a statement. “Products to make a British breakfast and English afternoon tea have therefore proved hits.”

In its home market, Sainsbury's, like Britain's other traditional supermarket chains including no.1 chain Tesco, is being squeezed by the fast growth of German discounters Aldi and Lidl.

Sainsbury's is hoping to complete the acquisition of Argos-owner Home Retail next month, a takeover designed to reduce its reliance on food and drink sales.

© Reuters