GSK, Pfizer Create HIV JV

GlaxoSmithKline and Pfizer have entered into an agreement to create a new company focused solely on research, development and commercialization of HIV drugs. The focus of the new business will be to invest in R&D of innovative HIV treatments and formulations that improve adherence and overcome resistance to the virus. With their combined portfolios, the new HIV business will hold a 19% share of the market. GSK will initially hold an 85% equity interest in the new company and Pfizer will hold 15%, based on the value of their currently marketed products.

The new company will have a portfolio of 11 marketed products including Combivir, Kivexa and Selzentry/Celsentri. Based on 2008 pro-forma results, this combined portfolio generated sales of approximately $2.4 billion. The company’s pipeline includes six new, targeted medicines, with four compounds in Phase II development. Altogether, the new company will have 17 molecules to develop in fixed-dose combinations as possible new HIV treatments. The new company will contract R&D services directly from GSK and Pfizer to develop these medicines.

The new company will also invest in early-stage research and discovery of HIV medicines, under a new alliance. GSK and Pfizer will continue to conduct discovery R&D into HIV medicines and the new company will have exclusive rights of first negotiation related to any new HIV medicine developed by either GSK or Pfizer.

Andrew Witty, GSK’s chief executive officer, said, “Today marks a definitive step by GSK to renew our focus and deliver more medicines, more efficiently, to people living with HIV/AIDS. At the core of this specialist business is a broad portfolio of products and pipeline assets, which can be more effectively leveraged through the new company’s strong revenue base and dedicated research capability. HIV remains a global threat with increasing incidence and viral resistance. This new company will be better placed to meet these challenges and improve access to treatments.”

Jeff Kindler, Pfizer’s chief executive officer, added, “By combining Pfizer’s and GlaxoSmithKline’s complementary strengths and capabilities, we are creating a new global leader in HIV and reaffirming our ongoing commitment to the treatment of the disease. With the strength of the companies’ current HIV products, as well as the complementary fit of Pfizer’s HIV pipeline and GSK’s global distribution capabilities, the new company is well positioned to bring new and improved medicines to patients with more speed and efficiency. The new company can reach more patients and accomplish much more for the treatment of HIV globally than either company on its own.”

Dominique Limet has been appointed chief executive officer designate and a member of the board of the new company. Mr. Limet is currently senior vice president and head of GSK’s Personalized Medicine Strategy. He has held a number of senior leadership roles at GSK including as regional president for Southern and Eastern European markets and as general manager of GSK France. Upon the closing of the transaction, a head of R&D will be appointed to oversee all R&D activities for the new company. GSK and Pfizer will provide all manufacturing and other services.

To reflect the potential future performance of their respective HIV pipeline products, GSK and Pfizer have agreed on a structure for their equity interests to be adjusted based on the achievement of specified sales and regulatory milestones. If all milestones are achieved, GSK’s equity interest in the new company would be 75.5% and Pfizer’s would be 24.5%. If the milestones are achieved with respect to pipeline assets originally contributed by GSK, GSK’s equity interest would be 91% and Pfizer’s would be 9%. If the milestones are achieved with respect to Pfizer’s pipeline, GSK’s equity interest in the new company would be 69.5% and Pfizer’s would be 30.5%.