Glaxosmithkline Beecham Merger Case Study

1031 Words5 Pages

MERGER OF GLAXO WELLCOME AND SMITHKLINE BEECHAM BY SARTHAK PUNYANI 13020841164 INTRODUCTION The reports talks about the Merger of Glaxo Wellcome and Smith Kline Beecham. This deal was considered as the merger among the equals. The merger took place in December 2000 after two years of long struggle between the two companies to come to a consensus. The then CEOs of Glaxo Wellcome (Richard Sykes) and SmithKline Beecham (Jan Leschly) did not want the companies to merge into single entities. But soon after Leschly declared his retirement the two companies came together to form what we now know as GlaxoSmithKline. HISTORY OF GLAXO WELLCOME Glaxo welcome was created in 1995 when Glaxo took over Wellcome for £9bn. This …show more content…

The company was a result of a 1989 transatlantic merger, which set a world-wide trend of pharmaceutical company mergers. The Beecham Group was founded in 1842, when Thomas Beecham came out with his cure-all Beecham pills and powders. During the 1950s and 1960s, the company excelled in the research of antibiotics, discovering Amoxycillin, one of the most widely used anti-bacterial drugs John Smith opened his first drugstore in Philadelphia in 1830, the firm was renamed Smith, Kline & Company in 1875, after Malon Kline showed great entrepreneurial spirit. Drugs like Thorazine made SmithKline the leading pharmaceutical firm. Thorazine revolutionised the treatment of mental illness in the 1950s. The development of the capsule Tagamet, a peptic ulcer therapy became the world 's first drug with annual sales of more than $1bn Market Value £43bn Annual Turnover £8.2bn R&D spend £750mn Employees 8300 in …show more content…

The industry was worth $350bn, and was exhibiting annual growth of 10 per cent and margins of over 35per cent. Analysts predicted a 7 per cent compounded average growth till December 2003, estimating the industry to reach $435bn. Total sales of the 14 pharmaceutical companies were $245.4bn with profits of $36.1bn, a healthy 14.7 per cent return on sales. An increasing proportion of sales was spent on R&D that had risen $20bn annually in the early 1990s to about $35bn in 1999. AstraZeneca spent 19.8 per cent of its 1998 sales on R&D, Hoffmann-La Roche 19.1 per cent, and Eli Lilly 18.8 per cent. Pharmaceutical companies till now had been able to enjoy years of effective patent protection from imitators but now they could study patent applications and apply new methods to come up with similar drugs which didn’t violate the patent. Other than the R&D costs the Marketing costs were rising too, in terms of salespeople employed and in terms of the rise of new direct to- consumer advertising as opposed to only marketing to physicians. The number of sales people employed by the industry grew to 65000 in 2000 opposed to 40000 in 1995. Direct-to-consumer advertising spend increased from $313mn in 1995 to $1,172mn in 1998, and was projected to double in 2000, to about $2300m. It was argued that larger size enabled merged firms to pool their marketing and financial resources to respond to the

More about Glaxosmithkline Beecham Merger Case Study

Open Document