GlaxoSmithKline plc (ADR) (NYSE:GSK) has announced that its partially owned subsidiary, ViiV Healthcare has reached an agreement with Bristol-Meyers-Squibb, to acquire the latter’s HIV related assets and portfolio. The assets and portfolio are in the late stages of their development. The agreement is currently under antitrust approval, while the integration has already been initiated. GSK has been in contention with Gilead Sciences Inc. for a share of the HIV market. However, Gilead commands a 50% market share, while GSK continues to share the rest of the 50% with other companies.
HIV is one of the deadliest diseases known to man, with about 40% of the infected population not having proper access to treatments. The FY2015 saw companies report $20 billion from the sale of HIV drugs, combined, while $11 billion of this was generated by Gilead alone. GSK is, however, currently working on the development of HIV suppression drugs, with fewer side effects as compared to those from Gilead. It is expected that GSK’s cabotegravir, currently under development, would generate $400 million in annual sales, by 2020. Added to this, GSK is also working to develop monthly shots as an alternative path for HIV treatments.
The CEO of ViiV Healthcare, Dominique Limet, stated that the recent agreement would ensure that his company gains access to one of the most robust HIV product pipelines in the industry. He further hinted that his company might combine the new portfolio, with the existing one, to develop a broad spectrum of HIV treatment and prevention options.
The deal has been valued at $350 million upfront payment, with first commercial sale milestones of up to $1.1 billion. The figures represent the combined amount of both assets and portfolio sales. Currently, GSK holds a number of drugs that are still in the pipeline. Hence, for the time being Gilead is expected to continue holding its control over the HIV market.
GlaxoSmithKline plc (ADR) (NYSE:GSK) closed at $39.33, after having a trade volume of 2.86 million and losing 1.07%, during the February 22 trading session.