Company Analysis - GlaxoSmithKline
Mergers and acquisions - building blocks to success
2005 was said to be the "year of the vaccine for GSK" after a heavy expansion into the vaccines arena. It seems that biotechnology has been the main driver of innovation in the pharma sector for some time, with big pharma seeking close relations with the highly innovative biotech industry. In fact, GSK's acquisition of Corixa in 2005, despite being partially driven by the financial potential of Corixa's Monophosphoryl Lipid A (MPL) (a novel adjuvant contained in many of GSK's candidate vaccines including its potential blockbuster Cervarix), also dramatically expanded GSK's already lucrative vaccine platform, providing it with muchneeded additional expertise in the field. With Jean- Pierre Garnier holding such high aspirations for Cervarix, the US $300 million spent by GSK to gain control of MPL is likely to prove a shrewd investment.
In January of this year, GSK bolstered its biopharmaceuticals portfolio with the purchase of UK-based speciality antibody company, Domantis. At a cost of £230 million, Domantis has become a part of GSK's Biopharmaceuticals Centre of Excellence for Drug Discovery (CEDD), catapulting GSK into the arena of next-generation antibody drugs by more than doubling the number of projects it has in this area.Further expanding its vaccines business, GSK acquired Canadian biotech company, ID Biomedical, its sights being set on the company's influenza vaccine, Fluviral. Additionally, the acquisiton of ID Biomedical's Canadian manufacturing facilities provided GSK with the increased capacity necessary for the development of next generation 'flu vaccines, which will aid preparations for a 'flu pandemic. With fears a pandemic was imminent, the British government was in talks with GSK last October with regards to stockpiling tens of millions of doses of GSK's, as yet unregistered H5N1 vaccine. GSK also has a similar deal with the governments of Switzerland, Singapore and France. This is contributing to GlaxosmithKline's healthy growth, comparative to that seen with other top pharma companies, including Pfizer and Novartis, who have also recently branched into the vaccine field in a big way with their acquisions of Powdermed and Chiron, respectively.
Although GSK was listed as the 2nd worst FTSE100 performer in 2006, the continued growth and strength of Jean-Pierre Garnier's business strategy should make 2007 a bigger and better year. Indeed, the strategic acquisions made over the last few years look to be falling into place, with the vaccine push being the first success of potentially many more.
In January of this year, GSK bolstered its biopharmaceuticals portfolio with the purchase of UK-based speciality antibody company, Domantis. At a cost of £230 million, Domantis has become a part of GSK's Biopharmaceuticals Centre of Excellence for Drug Discovery (CEDD), catapulting GSK into the arena of next-generation antibody drugs by more than doubling the number of projects it has in this area. The acquisition of Domantis' proprietary antibody technology, the dAb (domain antibody) platform, gives GSK a chance to expand upon Domantis' pioneering approach to developing next-generation antibody therapeutics. With the additional gain of exclusive access to the intellectual property for Domain Antibodies, GSK is now the only company capable of fully exploiting this approach. Although GSK is predominantly a pharmaceutical company, with this intelligent acquisition, Jean-Pierre Garnier has ensured a permanent presence in this up-and-coming field of biotechnology.
A further noteworthy benefit of this acquisition is the ability to expand the use of the dAb technology into further therapy areas. It enables dAbs to be utilised as building blocks for therapeutics simultaneously directed at several disease targets including asthma, chronic obstructive pulmonary disease, rheumatoid arthritis and multiple myeloma. Indeed, the acquisition of Domantis by GSK highlights the tremendous potential for dAbs and provides the funding capabilities to advance a number of candidates into clinical trials.
The recent acquisiton of Praecis, and the gain of its lead prostate cancer drug Plenexis (abarelix) represents a more recent strategic acquisition by GSK, indicating that JP Garnier's strategy for growth continues to include the acquisition of interesting prospects.
