British drug giants Glaxo Wellcome and SmithKline Beecham have clinched a GBP114 billion (about HK$1.44 trillion) merger to create the world's largest pharmaceutical group - a deal that is likely to accelerate consolidation across the sector.
The merger brings together a company with combined sales of GBP15 billion and an estimated market share of 7.3 per cent, employing 40,000 people worldwide.
It will create a giant in research and development (R&D) of crucial importance to the pharmaceutical industry in its continuing quest to find faster and more effective drug treatments.
Glaxo SmithKline said that it would have a R&D budget of about GBP2.4 billion, easily outstripping its nearest rivals.
This will give it market leadership in four of the five principal therapeutic markets, including treatments for the central nervous system, anti-infectives, respiratory medicine and alimentary and metabolic drugs.
Glaxo shareholders will end up with about 58.75 per cent of the combined company, with the remaining 41.25 per cent held by SmithKline shareholders.
The companies said annual pretax savings as a consequence of the deal could be about GBP1 billion by 2003, of which GBP250 million is to be circulated directly back into R&D.
