Pfizer approached GSK for takeover before Allergan
pharmafile | November 4, 2015 | News story | Research and Development, Sales and Marketing | Allergan, GSK, Pfizer, financial results, product pipeline
Pfizer had a takeover approach rejected by fellow pharma giant GlaxoSmithKline, before turning its attentions to Allergan, it has emerged.
A report from the Financial Times claims Pfizer seriously considered GSK as an acquisition target, but that GSK’s board was unimpressed by the terms suggested.
The British company was apparently less than receptive to the approach, due to an overdue upturn in its performance following two years of declining sales. The turnaround has resulted in chief executive Sir Andrew Witty announcing better-than-anticipated Q3 financial results.
GSK’s revenues increased 11% year-on-year (at a constant exchange rate) to £6.1 billion. However company earnings fell 13% after the Novartis asset-swap transaction, and “a relatively weak performance in the group’s global pharmaceuticals division”, which declined 15% on poor respiratory and established product sales.
The GSK board is apparently happy to allow Witty more time to implement his new strategy, based on a higher-volume, lower-price growth approach. Witty took on the top job in May 2008, and has overseen Glaxo’s multi-billion asset-swap with Novartis earlier this year, which divested the British company of its oncology business in return for Novartis’ human vaccines unit.
The company also unveiled more than 40 pipeline drugs and vaccines at an investor event in New York. It plans to file up to 20 by 2020, with a focus on HIV and other viral infections, respiratory medicine, oncology, immuno-inflammation, vaccines and rare diseases.
Any deal for GSK would also likely have faced similar political opposition in the UK to that seen when Pfizer attempted to buy AstraZeneca, another British company. Certain UK politicians were concerned that the hostile takeover attempted would result in lost jobs and R&D investment, and AZ eventually rejected a final offer of £69 billion.
US politicians meanwhile are resistant to Pfizer’s apparent attempts to perform a ‘tax inversion’. This would see it move its headquarters from New York, to take advantage of the more favourable UK and Irish taxation rates.
While both the AstraZeneca and GSK deals are dead, a successful takeover of the more receptive Allergan, a Dublin-based company which last week described the talks as ‘friendly’, would also potentially allow Pfizer to slash its tax rates by more than 20% from the 25.5% it paid last year.
Analysts believe Pfizer would have an easier time integrating Allergan’s primarily US-based operations with its own than it would with GSK – which is a very much globally entrenched multinational.
Talks between the two are believed to now be sufficiently advanced that a successful deal is the most likely outcome, with price being the sole sticking point.
Joel Levy
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