Glaxo CEO Sees ‘Sustainable Growth’ From Deals, Drugs (Update1)
Jan. 9 (Bloomberg) –
, Europe’s largest
drugmaker, will boost its reliance on acquisitions and licensing
deals to bring new medicines to the market, Chief Executive
Officer Andrew Witty said in an interview.
The London-based company has 30 drugs in the final stage of
testing needed before approval and plans to release about five
new products a year, Witty, 44, said yesterday. Glaxo will
sustain drug development by seeking smaller, “bolt-on”
alliances and takeovers, or deals valued from about $50 million
to the “low billions,” he said.
“I would feel very comfortable if five or six years down
the road half of our drug approvals came from products which
weren’t originally discovered in a GSK laboratory,” Witty said
in the interview in New York. “Now, that number is more like 25
to 30 percent.”
Witty, who took over as CEO last May, said Glaxo will expand
into emerging markets and over-the-counter products, mostly
through acquisitions and licensing agreements. The drugmaker will
also focus on developing vaccines. Revenue from these areas will
ease the company’s reliance on the “one or two products” that
currently make up about
, Witty said.
“This is no longer a sector that is perceived by the market
to be without risk,” he said. “We need to make sure we’re
delivering sustainable growth with a low-risk profile. We need to
make sure we are finding multiple sources of drugs.”
Even though patent protection expired for four of the
company’s 15 bestsellers last year — allowing $3 billion in
annual peak sales to be lost to generic competition — Witty said
Glaxo is in a stronger position than other drugmakers.
The company’s pipeline of experimental drugs, along with the
fact that Glaxo has already withstood most of its “patent
cliff,” means Glaxo isn’t desperate to make costly merger deals,
he said.
“We can see a way forward without having to go through big
transactions,” Witty said. “We certainly don’t need a survival-
driven transaction.”
Glaxo has made “dozens” of small acquisitions in 2008,
according to
, a company spokeswoman. In December,
Glaxo bought rights to
’s technology for developing
arthritis medicines, acquired Bristol-Myers Squibb Pakistan
(Private) Ltd. and extended an alliance to develop arthritis
drugs with Belgium’s
.
Glaxo shares gained 0.4 percent last year, the second-best
performing stock among the top-five European drugmakers behind
U.K. rival
. The stock gained 13.5 pence, or 1.1
percent, to 1,298.5 pence at 8:51 a.m. in London trading.
Witty said Glaxo won’t vie to sell generic versions of
biologic drugs, saying the possible market glut of so-called
biosimilars will force prices down.
The company last year said it will eliminate at least 2,000
jobs as part of a plan to save 700 million pounds ($1.06 billion)
by 2010. Witty said he would give a clearer picture to investors
about the company’s financial goals during fourth-quarter results
presented in February.
“It’s very important we have milestones associated with the
strategy we’re following and we’re not simply fixed on one
quarter to the next,” he said.
Witty said he has engaged in talks with policy makers and
legislators in Washington about health-care policy under a Barack
Obama administration and is “quietly optimistic” about
drugmakers’ prospects under the new president.
“The industry needs to play a constructive role” in
health-care reform, he said. “I’ve been pleasantly surprised at
the way in which the administration and those around the
administration are engaging in this.”
Last Updated: January 9, 2009 04:03 EST