Glaxo, Wellcome Product Lines Are Complementary

6 February 1995

Glaxo's bid for Wellcome might be considered a textbook model of horizontal integration; it broadens the product categories in which the company competes, extends the research base and offers opportunities for cost-cutting and consolidation. Both companies have considerable research expertise, and Glaxo could bring to the venture the marketing muscle which has made Zantac (ranitidine) the best-selling pharmaceutical product of all time.

The move has been hailed as a turnaround for Glaxo, which remained steadfastly independent under ex-chairman Sir Paul Girolami, but in reality the company's fundamental strategy of a commitment to research is unchanged. The Wellcome bid represents a culmination of months of ventures with biotechnology companies and marketing partners pursued by Glaxo chief executive Sir Richard Sykes.

A Glaxo Wellcome link-up would generate a combined product portfolio with considerable breadth, which will be an important asset in the changing pharmaceutical market where dealing with Health Maintenance Organizations and other health care buyers is becoming obligatory. The two companies have complementary product portfolios, with established or emerging products in several of the same therapeutic categories but without directly competing elements.

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