GLAXOSMITHKLINE may find its next acquisition target where the UK drug-maker found the last two: among more than a dozen companies it collaborates with to develop new treatments.
Glaxo has stakes in more than 10 publicly traded companies, including DiaDexus, which develops diagnostics for detecting heart attack and stroke risk.
The London-based company also has stakes in an undisclosed number of closely held businesses. Glaxo this year has agreed to buy an 80 per cent share of Cellzome it did not own, made a hostile bid for Human Genome Sciences, and increased its stake in Theravance.
Glaxo had existing relationships with all three companies. Boosting profit growth by looking to smaller rivals with promising products or technologies is an industry-wide trend as large companies face generic competition.
“This is one of the smartest things that can be done with MA strategy,” said Gbola Amusa, a healthcare analyst at UBS. “As innovation-based MA is sometimes a market for lemons, a buyer is typically at an information disadvantage to a seller. When there is a collaboration, however, there’s the potential to have the same information or more than the target.”
Mr Amusa said he sees Glaxo continuing with this strategy.
Glaxo did not already own a stake in Sirtris Pharmaceuticals when it acquired the US company for $720 million in 2008. Two years later Glaxo stopped development of Sirtris’s leading drug candidate, designed to mimic the benefits of red wine, after studies showed minimal efficacy against cancer, and some patients developed kidney damage.
Glaxo stock has returned 13 per cent in the past year, compared with a 9.1 per cent gain in the Bloomberg Europe Pharmaceutical Index of 18 companies.
The company said it considers smaller acquisitions that fit its business and provide an attractive return compared with share repurchasing or dividends.
“Within RD we have multiple alliances, including equity holdings with external partners both publicly listed and privately owned,” Glaxo said in a statement.
“Occasionally we choose to acquire RD platform technology companies which provide significant additional scientific capability for drug discovery.” – (Bloomberg)
