Partners signed to bolster GSK product pipeline
Glaxosmithkline, the UK's largest drug company, moved to bolster its meagre product pipeline yesterday by unveiling a string of new partnership deals alongside its second-quarter results.
The company said it had agreed a joint venture with Shionogi of Japan that gives it access to potential new treatments for HIV, strokes and Alzheimer's disease.
Jean-Pierre Garnier, the chief executive, said the deal bolsters GlaxoSmithKline's portfolio of products in clinical development.
"It will also give us access to new Shionogi products in the future, and is testimony to the fact GSK is becoming the established best partner in the pharmaceutical industry," he said.
Shionogi will have the right to buy out its partner in 10 years, and GSK will share the marketing rights to any drugs developed.
Second-quarter figures yesterday showed the fruits of merging the giant sales forces of Glaxo Wellcome and SmithKline Beecham in the deal that created GSK last year. Revenues were up 13 per cent on a year ago, at £5.1bn, and pre-tax profits were 15 per cent higher at £1.7bn.
Sales were buoyed by the US launch of Advair, a new asthma treatment, which took a 12 per cent market share in its first 12 weeks. The company also increased sales of Augmentin, its lead antibiotic, by 25 per cent and said new extra-strength Augmentin will be on the market by the end of the year.
The group forecast 18 per cent earnings growth for the full year, or 13 per cent if currency fluctuations are stripped out.
Mr Garnier also promised to squeeze additional savings from the merger and a review of manufacturing. GSK has already axed 1,800 jobs in the UK but the chief executive refused to spell out the details of any additional cuts. The restructuring is now expected to save £1.8bn by 2003, up from the previous estimate of £1.6bn. The forecast costs of the shake-out jumped from £3bn to £3.8bn, largely due to redundancy payments.
Mr Garnier said: "There will be minimal job losses. These extra savings are due to fine tuning of our operations; in some cases they will result in job losses, and in some cases they won't."
GSK shares fell after the figures, which were in line with analysts' forecasts. They closed at 1,939p, down 24p.
The stock has been dogged by analysts' criticism of its longer-term growth prospects, in the absence of any drugs in development which may have blockbuster potential.
The Shionogi deal and other partnerships announced yesterday were welcomed by analysts. GSK also signed collaborations on cancer and what Mr Garnier called "a very sexy field of research in neurology and psychiatry".
But there was disappointment that Tranilast, a drug for use after heart surgery, has been dumped after disappointing Phase III trial results.
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