(MEBG) – An investigation by the U.S. Federal Trade Commission is holding up the merger of two pharmaceutical giants, Glaxo Wellcome and SmithKline Beecham, which when complete will create the world’s biggest pharmaceutical company in terms of sales, with a market share of 7.5 percent. Nonetheless, Pfitzer, which currently is in the process of acquiring Warner-Lambert, will be the biggest by capitalization.
Although the Glaxo Wellcome and SmithKline Beecham merger already has final approval from the European Commission, the FTC remains concerned about the new conglomerate’s dominance when it comes to diabetes drugs. SB already markets Avandia, a promising new diabetes pill, and Glaxo has a compound known as 570 presently in development. Additionally, the FTC is also requiring that Glaxo SmithKline dispose of two overlapping products - a herpes medicine and a drug that treats chemotherapy-induced nausea.
Nontheless, FTC approval is expected within weeks. The merger must then be affirmed by the British High Court and by the shareholders.
Market analysts believe that the merger will further increase competition in the pharmaceutical market. The merged company’s operation as a single company is expected to begin on January 1, 2001.
The merged company’s operational headquarters will remain in the two companies’ present sites, Philadelphia and North Carolina—though Philadephia is likely to become the center of power, confirming the strong position of SB within the merged company, despite it being the junior partner in terms of capitalization. Corporate headquarters will remain in London, where the majority of shareholders are based.
