[Ip-health] FT: GSK (and others) in drive to license rights to drugs invented elsewhere

[James Love]

*  Before the 1990s marketing rivals' products was rare, but licensed
products now contribute about $60.2bn a year to the revenues of the top
20 pharmaceutical companies about 24 per cent of their total revenues.
One reason is that consolidation has created companies with much more
marketing muscle but has done little to improve research productivity.

*  Four companies - GSK, Roche, Novartis and Aventis - account for 50
per cent of all licensing activity since 2001, as in-licensing has
become a core part of their strategy.

*  This is good news for biotechnology companies, which lack marketing
expertise.



GSK in drive to buy up drugs rights
By David Firn in London
Published: May 18 2003 22:02 | Last Updated: May 18 2003 22:02

GlaxoSmithKline is buying rights to almost twice as many drugs as its
rivals, according to new research, in a bid to replenish its dwindling
development pipeline.

A study by consultants Wood Mackenzie shows that, since 1988, GSK has
bought licences to market 80 drugs from other companies after the
failure of several of its own products. More than half the licences have
been acquired since 1998. Rivals such as Aventis, Eli Lilly and
Bristol-Myers Squibb have acquired rights to 40 since 1988, and the
average for the industry's top 20 companies is 31.

The report's findings will add to pressure on the Anglo-American group
as it faces a shareholder rebellion over the pay package of Jean-Pierre
Garnier, chief executive, at its annual meeting on Monday.

Leading shareholders believe that the company's pay policy could come
close to being voted down, with more than 50 per cent of votes expected
to be against it or abstaining.

While many of GSK's US shareholders are expected to back the policy,
many of its UK investors will make protest votes. The US shareholders
hold 17 per cent of the shares while their UK counterparts have 68 per cent.

Shareholder dissatisfaction with Mr Garnier's package has been
exacerbated by questions over the group's drugs pipeline.

Just three years after Glaxo Wellcome merged with SmithKline Beecham, in
a deal touted as the creation of a $4bn-a-year R&D powerhouse, the
group's sales growth is faltering and the company has had to accelerate
its licensing activities.

Licensing activity in the industry as a whole has slowed over the past
four years, largely because bidding battles have led to an increase in
the price of the most promising experimental medicines. But GSK has been
forced to buy more late-stage projects to make up for a string of
product disappointments and high-profile market withdrawals.

Many of the world's biggest-selling drugs are the result of a
partnership between small innovative companies and major pharmaceutical
groups.

Before the 1990s marketing rivals' products was rare, but licensed
products now contribute about $60.2bn a year to the revenues of the top
20 pharmaceutical companies about 24 per cent of their total revenues.
One reason is that consolidation has created companies with much more
marketing muscle but has done little to improve research productivity.

Four companies - GSK, Roche, Novartis and Aventis - account for 50 per
cent of all licensing activity since 2001, as in-licensing has become a
core part of their strategy.

This is good news for biotechnology companies, which lack marketing
expertise.

Cancer drugs account for most licensing activity. But GSK, the world's
leading company in anti-infectives, has struck the greatest number of
licensing deals in this area - partly prompted by the loss of patent
protection on Augmentin, its $1.7bn-a-year antibiotic.

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