There’s an interesting story in the WSJ about a merger between the HIV-drug businesses at Glaxo and Pfizer. Some details from the story:
Examples of cooperation among drug giants are unusual — Pfizer and Glaxo are the world’s top two drug companies by sales, respectively — since big pharmaceutical companies compete to sell products, attract top talent and bring the best new drugs to market. Such arrangements aren’t unprecedented, though: In 2007, AstraZeneca PLC and Bristol-Myers Squibb Co. struck a partnership to develop and market two diabetes drugs.
Mitigating the high risk of drug development is one attraction of working together. Putting a drug through clinical trials can cost hundreds of millions of dollars, and many drugs fail.
HIV is a tough area of drug development. There are a few dozen good treatments available, and coming up with something better has proved difficult.
Companies also have drawn criticism from AIDS activists for charging too much in both wealthy and poor countries. This pressure has led most companies to lower prices in recent years to not-for-profit levels in the poorest nations.
The HIV business has been a drag on Glaxo’s sales growth. Glaxo had HIV sales of £1.5 billion last year, up 5% from 2007, while its total sales grew 7% to £24.4 billion. Pfizer’s pipeline will help Glaxo “stay in the game,” Mr. Witty said.
The venture also will allow the companies to combine some products into new combination pills, which are widely used in HIV treatment.
The agreement allows Pfizer to increase its stake in the venture to as much as 30.5% if enough of its HIV drugs make it to market. If Pfizer’s products don’t reach the market, its share will drop to 9%, the companies said.
