Drugs firms forge emerging markets deal

Jan 24 2009 by Iain Laing, The Journal

THE world’s second-largest pharmaceutical group GlaxoSmithKline has agreed to buy Belgian peer UCB’s operations in a number of emerging markets for £486m.

The two companies announced the cash deal for more than 50 operations in Africa, the Middle East, Asia Pacific and Latin America, but excluding Brazil, Russia, India, China, South Korea and Mexico and UCB’s new core products.

Andrew Witty, the new chief executive of Glaxo, which has around 1,000 staff in Barnard Castle in County Durham and 500 in Cumbria, has made emerging markets a priority, a pledge backed up in December by the group’s acquisition of Bristol-Myers Squibb Co’s Pakistan operations.

Glaxo is seen also as a potential purchaser of South Africa’s Aspen Pharmacare Holdings after striking a ground-breaking deal with it in July to sell cheap branded generic medicines in emerging markets.

UCB described the activities Glaxo has agreed to buy as smaller markets for it, representing 3 to 4% of revenue, and said their sale would allow it to focus on key strategic areas.

UCB said the sale fitted in with its SHAPE programme launched last year, which will relocate resources to boost UCB’s specialist areas of the central nervous system and immunology.

The deal will mean Glaxo acquires rights to UCB brands such as epilepsy drug Keppra and allergy medicines Xyzal and Zyrtec.

In December GlaxoSmithKline revealed that 200 jobs will go at its County Durham factory, but pledged to invest £17m in the site next year.

The pharmaceutical group is Barnard Castle’s biggest employer, with 961 permanent staff and 65 agency workers at the 60-acre Harmire Road plant.

The jobs are expected to go over the next year to 18 months. The company announced a review of all its sites last year to save £700m over three years and began seeking voluntary redundancies in Barnard Castle in November.

Glaxo hopes the remaining 152 posts will go through further voluntary redundancy and early retirement. A separate design review in October identified 20 jobs to be shed in addition.

The announcement is the result of a three-month site review of staffing levels, structure and cost-cutting as Glaxo attempts to compete with makers of cheaper generic medicines.

However, it reiterated its commitment to Barnard Castle, which received investments of £48m in the last two years and will see another £17m spent next year. Glaxo is working with One NorthEast and the County Durham Development Company to provide retraining and community support for the town.