In a surprising yet significant move,
Pfizer and GlaxoSmithKline
(GSK), the world's No. 1 and No. 2 drug makers,
by sales, recently announced the formation of a joint
venture which will focus exclusively on R&D
and commercialization of HIV drugs, one of the few drug segments that is growing
in double digits. But the duo has so far lagged behind Gilead Sciences
Inc., a smaller rival, which has several category leaders under its fold,
like Bristol-Myers Squibb and Merck. Expectedly, the move is being keenly watched by
the rivals, as the global pharmaceutical industry passes through harrowing
times, characterized by lower prescription drug sales, several drugs going
off-patent (now or in near term), and a weak drug pipeline at Big Pharma.
It appears like a win-win situation for the two
companies which preferred to form a separate venture instead of going for mergers
and acquisitions. For, GSK, which was the largest seller of HIV drugs until
a couple of years ago, is facing loss of patent on some of its key drugs,
including its best-selling drug Combivir by 2012, but is now fighting falling
sales and a weak product pipeline; while Pfizer has so far been a fringe player
but now has a strong HIV pipeline.
The collaboration aims to capitalize on Pfizer's strong pipeline of
promising drugs and GSK's strong global distribution network to give a tough fight to
rivals and grab a larger pie of the fastest growing drug segment. However,
skeptics do not seem convinced, given the absence of such a move in the past
and the issue of level of commitment from the two drug giants given the fact
that two-thirds of the world's AIDs-affected patients reside in Sub-African
region who could not afford costly medicines and hence rely on the copycat drugs
from drug manufacturers from regions like India and China.
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