Glaxo- Smithkline Arms To Merge After September 25

The merger of the Indian arms of these companies may, however, prove to be a complex affair as both are listed on the local bourses. In fact, Glaxo and Wellcome have been unable to merge in India even five years after the international event.

While the management structure of the SmithKline and Glaxo is one, the other important issue is whether the former's Indian companies will be merged. Moreover, the whole process is believed to render many employees surplus.

Following the completion of the global merger which will form the world's biggest pharmaceutical group worth $187.2 billion, the two companies will decide on these issues.

 

Ever since the global merger was announced early this year, SmithKline's Indian companies have put on hold their business programmes, waiting for the merger to be complete.

Meanwhile, the local pharmaceutical industry is closely watching what line the merging entities take. The merger in India is expected to produce a company with sales not less than Rs 1,900 crore -- the largest in India. The net profit of the four listed companies, SmithKline Consumer Healthcare, SmithKline Beecham Pharmaceuticals, Glaxo and Burroughs Wellcome will also increase substantially.

SmithKline Beecham Plc, which has a presence across 160 countries, has 47,000 employees worldwide. It has a range of products and services that stretch from vaccines to energy drinks and analgesics to clinical laboratories and health management programmes. Hence, along with this, the product profile of the merged entity will have antiulcerants, vitamins and antibiotics from Glaxo.

Globally, the merged entity, which will be known as Glaxo SmithKline, will have a market share of 7.3 per cent. The company will be headquartered in London but will be largely run from a new operational base in the United States. It will have annual sales of $24 billion and a research budget of $3.9 billion.

It may be mentioned that the two British companies failed to merge two years ago. Globally, Glaxo shareholders will own 58.75 per cent and SmithKline investors 41.25 per cent of the new group

The Indian pharma company, SmithKline Beecham Pharmaceuticals improved its performance this year substantially. It registered a net profit of Rs 8.55 crore in the second quarter of 1999-2000, a 55 per cent rise over the corresponding quarter in the previous year.

The company's ability to compete in the price sensitive Hepatitis B market is limited due to the imposition of 44 per cent import duty. It is trying to overcome the external factors that have affected the sales and profits.