After a spell of ill health, pharmaceutical giant GlaxoSmithKline (GSK) is starting to perk up.
For five years, mighty GSK saw its share price steadily decline, as its most profitable drugs, including Zantac and AZT, lost their patent protection. Meanwhile, the incoming blockbusters from its pipeline slowed to a trickle. As a result, its stock, which had been at nearly $60 per share in early 2000, fell to $31 in July 2002, then stayed in the $30 to $40 range for the next three years. Today, with the price back up to almost $50 on May 17, the company appears to have revived.
While pharmaceutical turnarounds typically stem from mass layoffs or marketing blitzes, Glaxo did it the old-fashioned way: with nose-to-the-grindstone research. What’s more, rather than doing all its own in-house research, it didn’t hesitate to partner with biotechnology startups.
As a result, a host of its drugs and vaccines have enjoyed successful launches and the company’s pipeline is brimming new potential winners.
“They have more than a dozen promising drug candidates in clinical trials, says Joanna Chertkow, an analyst with DataMonitor. “And most of them come from biotech acquisitions or partnerships.”
Most promising right now is GSK’s vaccine division. First, it launched Rotarix, the first rotavirus vaccine since Wyeth pulled its version from the market in 1999, after a cluster infants experienced intestinal swelling from the vaccine. (The rotavirus is a diarrhea-causing virus that kills more than 600,000 babies a year, according to the U.S. Centers for Disease Control.)
GSK’s Rotarix alone could pull in billions in revenues, although it won’t be marketed in the United States or Europe any time soon. Rotarix is already available in Mexico and final negotiations with the health ministries of dozens of other countries, including India, Brazil, and Indonesia, are on the verge of wrapping up.
(For a behind-the-scenes account of the development of Rotarix, see The Vaccine That Almost Wasn’t in the June issue of Technology Review.)
Also, some time in the next 24 months GSK should finish up its Phase III trial of Cervarix, a vaccine for Human Papilloma Virus (HPV), a pathogen that has a direct link to cervical cancer. CEO Jean-Pierre Garnier has gone so far as to claim Cervarix could be the biggest-selling vaccine of all time. Analysts at Credit Suisse First Boston estimate it could pull in more than $4 billion per year. And GSK vaccines for Hepatitis B and herpes are also in the advanced stages of testing.
Many of the brightest stars in the company’s portfolio, though, are due less to the brilliance of its in-house scientists and more to its knack for finding the right research partners. And few of those partnerships promise to be as successful as its recent purchase of Corixa, a small Seattle-based vaccine firm. Their relationship culminated in a union in May, when GSK acquired Corixa for $300 million.