Speaking at GlaxoSmithKline’s results presentation in London, chief executive Jean-Pierre Garnier declared that he was in favour of going down the road of organic growth coupled with licensing deals rather than jumping on any merger merry-go-round.
When asked whether GSK would be interested in a major acquisition, Dr Garnier said that while one should never say never, the firm is “very picky” about getting involved in a large transaction, adding that the pipeline “is our number one priority.”
Having announced a flood of new licensing deals over the past few months, the most recent being yesterday’s announcement of a pact with Xenoport (for its neuropathic pain and restless legs syndrome drug) and an antidepressant link-up with Fabre-Kramer, Dr Garnier told PharmaTimes World News that the firm is on the look-out for even more such alliances. However, he noted that GSK will not pay inflated prices to get hold of promising compounds.
“Why would you pay big money for an early-stage drug?” Dr Garnier said, given the high failure rate, and suggested that some of GSK’s rivals have made a mistake in paying what he believes is way over the odds. Licensing in late-stage compounds is a much more effective strategy, he said, and gave PharmaTimes World News the example of buying a car one sees in the street. “Would you buy it if you knew there was a 93% chance that it will not work?”
When asked about restructuring, Dr Garnier also appeared to take a swipe at competitors such as AstraZeneca and Pfizer who have recently announced major job cuts. He told the media in London that GSK restructures all the time and took charges of £200 million last year in connection with those measures and revealed that 28 sites have been closed in the last five years but volume has improved 60% as the firm becomes more efficient.
However, he said that "we are not going to do a press conference to fire 3,000 people because the business is not good. We don't think that is good management,” noting that he had seen “several companies lose their major assets in 2006” and have “really nothing to replace them. That is very dangerous.”
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