£38bn merger pressure on Astra, GSK

12 April 2012

A FULL health check will be carried out on Britain's two largest drug groups next week when they unveil half-time figures and give crucial updates on trading.

GlaxoSmithKline's shares have fallen 40% this year and AstraZeneca 31%, as both companies grapple with problems that include loss of patents on key drugs - allowing cheaper rivals to enter the market - and difficulties gaining approval for new treatments.

Last week's £38bn merger of the world's number one Pfizer and Pharmacia puts pressure on the UK groups to embark on acquisitions.

GSK's latest worries concern launch of a rival generic form of its antibiotic Augmentin. It also faces patent threats to antidepressant Paxil, its biggest selling medicine with global sales of £1.8bn.

'Most people agree that Glaxo shares are very cheap, but it is difficult to see what is going to turn it round in the short term,' said Michael King at WestLB Panmure.

The main concern for AstraZeneca, led by Tom McKillop, is when US drug watchdogs will give it approval to launch Crestor, a new cholesterol lowering drug destined to be the company's next blockbuster.

The company needs to be able to sell the drug in a large enough dose to compete with Lipitor, the market leader made by Pfizer.

The rising cost of developing new drugs is putting pressure on boards to consider consolidation. The prospect of a get-together between AstraZeneca and GSK has been raised since the Pfizer deal. There were reports at the weekend that GSK is ready for a huge bid for US rival Eli Lilly.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in