GSK expands global footprint

GlaxoSmithKline agrees to pay E515 million to UCB for expansion into emerging markets

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LONDON—Seeking to further expand its presence into emerging markets, British pharma GlaxoSmithKline plc last month agreed to pay E515 million to acquire Brussels, Belgium-based UCB's portfolio of marketed medicines. The deal will allow GSK to broaden its horizon to more than 50 UCB operations in Africa, the Middle East, Asia Pacific and Latin America, while giving UCB a monetary boost in its core areas in central nervous system (CNS) diseases and immunology and strengthen its presence in the U.S., Europe and Japan.

The agreement allows GSK to acquire several leading pharmaceutical brands, including Keppra, its blockbuster treatment for epilepsy, which had sales last year of about E132 million, as well as acquiring allergy therapeutics Xyzal and Zyrtec.

Closing of the transaction is slated to take place late this month.

The targeted deal is the latest in a series launched by Andrew Witty, GSK's new chief executive, as he attempts to diversity, according to media reports. The plan allows GSK to capitalize on its brand and exploit the overlap between prescription and over-the-counter consumer health care products in the emerging markets over the west.

"This acquisition will strengthen and expand GSK's product portfolio in these countries, helping us to meet the needs of patients, particularly in the areas of epilepsy and respiratory," says Abbas Hussain, president of Emerging Markets at GSK.

The agreement does not include UCB's new core products such as Cimzia, Neuro or Vimpat—and does not provide rights to any of UCB's R&D pipeline programs, Hussain says.

Recruited from Eli Lilly & Co. to serve as president of GSK's new emerging markets division early last year, Hussain has overseen several deals in the past year. These include the purchase of Bristol-Myers Squibb's portfolio of medicines in the Middle East and Pakistan, a licensing deal with Aspen, the South-African-based generics company, and a joint venture for vaccines in China.

The commercial operations and product distribution rights to be acquired by GSK represent approximately three to four percent of UCB's 2008 expected revenue of at least E3.3 billion, the company stated.

The acquired products will be sold in Asia Pacific territories, including Malaysia, Taiwan, Thailand and Vietnam; Middle Eastern territories, including Egypt, Pakistan, Saudi Arabia and United Arab Emirates; South Africa; and Argentina and Chile, GSK stated. China, South Korea, India, Australia, Mexico, Brazil and Malta are excluded.
With a strong footprint in emerging markets, GSK has forecast emerging markets to account for 40 percent of growth in the worldwide pharmaceutical market by 2020, and has a new strategy to accelerate sales growth in these markets.

This was also a deal UCB could not refuse.

"This is a win-win agreement," Roch Doliveux, CEO of UCB, said in a statement. "Consistent with our core strategies outlined by the SHAPE program, UCB focuses on its core areas, while GSK acquires assets which fit with its growth and diversification strategy. UCB will continue to strengthen its core indications areas of CNS and immunology and its presence in its key strategic markets to bringing new medicines to patients who suffer from serious diseases."

Further details were not disclosed.

UCB is also pursuing its transformation into a leading biopharmaceutical company by continuing to invest in its late stage pipeline and innovative breakthrough research, while preparing launches of several new products in CNS and immunology, the company reported.  With the recent approval of Cimzia for Crohn's disease in the U.S., and of Vimpat for epilepsy in Europe and the U.S., UCB says it "has reached the right point in time to transform into a specialist company." In early January, UCB announced a strategic alliance with the German oncology specialist, Wilex, to develop UCB's pre-clinical oncology portfolio.

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