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GSK unveils Indian research tie-up as sales rise PHARMACEUTICALS
By GEOFF DYER.
428 words
23 October 2003
Financial Times
21
English
(c) 2003 The Financial Times Limited. All rights reserved
GlaxoSmithKline underlined the growing interest from pharmaceuticals companies
in India when it announced yesterday it was entering into a wide-ranging
research alliance with Ranbaxy, India's largest drugs company.
The Anglo-American pharmaceuticals group, the second largest in the world, said
it would collaborate with Ranbaxy in drug development projects in a number of
therapeutic areas. The alliance is the latest attempt by the western
pharmaceuticals industry to tap India's large number of high-quality but
low-cost scientists.
With other companies moving to outsource parts of their research operations and
conduct clinical trials in India, there have been predictions that the country
might replicate in pharmaceuticals its success in information technology.
Jean-Pierre Garnier, chief executive of GSK, said the deal with Ranbaxy was not
an exercise in outsourcing. But he said: "It is true that the economics of R&D
in India are very different - $100m spent on research there would cost a lot
more in the US or Europe."
Under the deal, GSK will have the rights to market drugs that are developed in
all countries other than India. While GSK will do most of the later-stage
development work, both companies will work together on different parts of the
discovery process. "The idea is to combine skill sets, which include excellent
chemistry, with our technology infrastructure," Mr Garnier said.
The deal was announced as GSK unveiled a 22 per cent increase in third-quarter
earnings per share to £1.69bn ( $2.8bn), in line with analysts' estimates, after
turnover rose 9 per cent from £5bn to £5.47bn. Pharmaceutical sales climbed 10
per cent at £5.46bn, driven by a strong performance in the US.
For the nine month period, pre tax profits were up from £4.81bn to £5.44bn, and
revenues increased from £15.54bn to £16.06bn.
Shares in GSK fell 2.6 per cent to £12.64 on disappointment among some investors
that the group did not increase its forecast for 2003 earnings.
Mr Garnier said that generic competition would soon wipe out sales of its Paxil
anti-depressant drug, however the new once-a-day version of Paxil had held its
market share since the launch of generics and was expected to grow.
Ranbaxy has been expanding rapidly in the US generics market in recent years,
however along with a number of other Indian companies it is also trying to
develop its own drugs. See Lex www.ft.com/healthcare
Europe Edition 1.
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