Global Insight Perspective | |
Significance | GlaxoSmithKline (GSK) will pay US$1.65 billion to acquire Reliant Pharmaceuticals and gain access to successful cardiovascular treatments. |
Implications | GSK will expand and strengthen its slightly undersized cardiovascular portfolio through the deal, cementing its production facilities in the United States. |
Outlook | The acquisition will most likely leave the U.K. pharma company out of the race for U.S. Biogen Idec but should help to counter balance the losses from Avandia. |
U.K. pharmaceutical company GlaxoSmithKline (GSK) has announced that it will acquire U.S. Reliant Pharmaceuticals (Reliant) by the end of the year in a cash deal worth US$1.65 billion. Reliant, which specialises in cardiovascular therapies, has generated US$341 million in net sales over the first nine months of 2007, with Lovaza (omega-3-acid ethyl esters), its star product, whose sales doubled year-on-year, accounting for US$206 million (60%) of that revenue. Lovaza, an adjunct to diet treatment for patients with abnormal triglyceride blood levels, is the only omega-3 medicine approved in the United States. In the non-statin dyslipidaemia sector, which was estimated at US$2.2 billion in 2006 and which is expected to grow over 20% a year, Lovaza claims a market share of 10%.
The deal will strengthen GSK's portfolio in the field of heart diseases, with products that complement its blockbuster Coreg (carvedilol) for the treatment of heart failure and hypertension. In addition to Lovaza, GSK gains access to DynaCirc CR (isradipine) and InnoPran XL (propanolol HCl), both for the treatment of high blood pressure, and Rythmol SR (propafenone) for the treatment of abnormal heart rhythms. Reliant had in-licensed marketing rights for the products to Norwegian company Pronova.
In the last few years, pharmaceutical merger and acquisition deals have increased in terms of volume and value. Consolidation, portfolio, and pipeline expansion is the name of the game in the face of patent expiry and generic competition. In 2006, the field was dominated by the acquisition of German Schering by compatriot firm Bayer (see Germany: 24 March 2006: Bayer Trumps Merck as Schering AG Accepts Higher Counter-Offer), and the acquisition of U.S. Pfizer Consumer healthcare by compatriot Johnson & Johnson (see United States: 27 June 2006: Pfizer Emerges Streamlined From Premium Deal with J&J). Biotechs are now also routinely targeted by big pharma companies. The first half of 2007 alone saw the multi-billion acquisitions of U.S. Medimmune by U.K. AstraZeneca (see United Sates - United Kingdom: 23 April 2007: AstraZeneca to Buy MedImmune for US$15.6 bil.) and of Organon Biosciences by Schering-Plough. GSK is no stranger to this strategy and has used it to its advantage to expand its portfolio of oncology products (see United Kingdom: 19 December 2006: GSK Licenses Genmab's HuMax-CD20, Drops Vertex's Brecanavir and United Kingdom: 22 December 2006: GSK’s Shopping Spree Continues with US$54.8-mil. Acquisition of U.S. Biotech Praecis Pharmaceuticals).
Outlook and implications
Thanks to the acquisition of Reliant's highly successful products, GSK, the world's second-biggest pharmaceutical company, strengthens a slightly undersized cardiovascular portfolio, cementing its production facilities in the United States. The news comes at a good time for GSK as the company's revenues recently suffered from safety scares around Avandia, one of its key drugs (see United Kingdom: 25 October 2007: Crunch Time for GSK as Q3 Avandia Losses Prompt New Job Cuts Plan and United States: 15 November 2007: Second Boxed Warning Added to Avandia’s U.S. Label).
A number of U.S. biotech companies have been acquired by large multinational pharmaceuticals and speculations have been running high on the future of U.S. Biogen Idec. GSK and U.S. Pfizer were both tipped to be in the running to acquire Biogen Idec, but with GSK spending US$1.65 billion on Reliant, it now seems highly unlikely that the British giant will have enough spare cash to pursue a deal with the U.S. biotech. It is worth noting that no later than last month, GSK also dedicated around US$2 billion to co-develop experimental drugs with three U.S. biotech companies (see United Kingdom: 11 October 2007: GSK Acquires Development Rights to Melanoma Drug in US$1-bil. Deal with Synta Pharmaceuticals). On the other hand, Pfizer which last week acquired Coley (see United States: 19 November 2007: Pfizer to Acquire Coley) for a modest US$164 million could still be in the race to acquire Biogen Idec.