GSK Chief Dispels Merger Rumours

Article excerpt

JEAN-PIERRE GARNIER, the chief executive of GlaxoSmithKline, has poured cold water on suggestions the company will embark on another mega- merger after Pfizer, the only pharmaceutical company bigger than GSK, unveiled its acquisition of Pharmacia this month.

Mr Garnier told analysts that GSK "may not be the most active" if Pfizer's deal sparked a new wave of consolidation across the industry.

He said GSK still needed to show it could generate blockbuster new drugs from its research and development powerhouse, created from the merger of Glaxo Wellcome and SmithKline Beecham in 2000. "We are far from finished proving our point here. We are focused on our tremendous early stage clinical pipeline and believe that is the best way to create value," he said.

GSK shares have plumbed five-year lows amid concerns it would be tempted to buy a rival, such as Bristol-Myers Squibb or Eli Lilly in the US, or even its smaller UK rival AstraZeneca. On previous conference calls with the investment community, Mr Garnier has been more coy, deflecting questions on possible targets and refusing to rule out a deal. But his stance seems to have hardened since it was revealed in May that GSK held preliminary merger talks with Bristol- Myers Squibb. GSK shares dropped 3 per cent on the news.

The shares were also unsettled when Pfizer announced its acquisition of Pharmacia earlier this month, raising fears GSK could seek a similar deal to catch up. The combined Pfizer-Pharmacia will have revenues some 50 per cent higher than GSK. But Mr Garnier told analysts yesterday that the Pfizer deal would put more pressure on smaller players than on GSK. …