Glaxo seeks to buy Canadian vaccine maker for 761 million pounds |
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Published
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Fri, 09 Sep 2005 00:35
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LONDON: GlaxoSmithKline is offering to buy Canadian firm ID Biomedical for 761 million pounds. The acquisition will position the company as a formidable player in the flu vaccines business. In the all-cash deal, the company is offering 35 Canadian dollars for each ID Biomedical share, which is at 13 per cent premium to the latter's closing price on Tuesday.
The deal provides for another company to bid at a higher price and GlaxoSmithKline to match such an offer.
ID Biomedical has been valued at 1.7 billion Canadian dollars and GlaxoSmithKline will assume its $77 million debt. Immediately, it will loan an amount of $120 million to ID Biomedical to repay term debt and finance its cash needs. The deal is expected to close end-2005 or early 2006.
There is lot of interest among global pharma firms in the vaccine business, which has so far been regarded a low-growth, low-price business. Newer technologies, threat of a pandemic and a shakeout in the industry has brought it to centre stage. GlaxoSmithKline itself is a leading vaccine suppler and it is of the view that the total vaccine market could quadruple in size by 2015 to between 17 billion and 24 billion pounds, from the current 5.2 billion pounds.
Last week, Novartis has bid to buy out U.S. vaccine maker Chiron offering $4.5 billion for shares of the drug maker it does not already own. Chiron had been one of the largest influenza vaccine suppliers but the contamination of some of its production sites in Europe prompted the U.S. Food and Drug Administration to halt its vaccine production last year.
GlaxoSmithKline's chief executive Jean-Pierre Garnier said the proposed acquisition is a unique strategic opportunity to increase current capacity of classic flu vaccines, to provide the company with increased capacity for next generation flu vaccines under development and to help it prepare for the threat of a flu pandemic. The company also hoped to have a greater presence in the United States vaccine market. It sells its flu vaccine in dozens of countries and had won U.S. FDA approval last week. However, it will sell only eight million doses in this country this year because of capacity constraints.
GlaxoSmithKline is planning to double its annual flu shot production to 80 million doses by 2008 and had bought a Wyeth vaccine factory and research site in the U.S. The market for flu treatments may more than double to $3.7 billion annually by 2010.
ID Biomedical had its fluviral vaccine treated with fast track status by the FDA and is now eligible for priority review.
Analysts conversant with the situation feel GlaxoSmithKline may have to face stringent regulatory questioning.
In the U.S. there was a shortage of flu shots when Chiron's Liverpool, England factory was shut down. Chiron was one of the two major suppliers.
The World Health Organization says flu virus infects 10 per cent to 20 per cent of the worldwide population during seasonal epidemics, causing 3 million to 5 million severe cases and resulting in 250,000 to 500,000 deaths each year.
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