GSK chief recounts merger reasons
21 February 2008 00:00 in Pharmaceutical Company Restructures
The outgoing chief executive officer (CEO) of GlaxoSmithKline (GSK) has recounted that a full merger was not the first port of call for the two British drugmakers Glaxo Wellcome and SmithKline Beecham.
In a television interview reported on Reuters, Jean-Pierre Garnier illustrated how the preferred option was to bring together the two companies? research operations.
He outlined fears held within the two firms over the large size of a potential merged company and then confirmed that the first decision was to merge R&D departments into one institute of research with the drug pipeline then split between the firms.
"We tried for six months to make this model work, which would not have been a full merger, and we realised we couldn't do it. It was not practical," Mr Garnier told CNBC Europe.
Although bringing together research departments would have been an innovative move, both companies found it impossible to share out and value the new drugs.
He indicated that there was no effective method for sharing because "you can't guess the value of those new drugs until those new drugs happen to be on the market".
This week has seen GSK announce new price reductions for its antiretroviral range of products offered on a non-profit basis in the world's developing countries.
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