Monday, December 21, 2009

2009 Big Pharma DOTY Nominee: GSK, Pfizer Join Hands in HIV

It's time for the IN VIVO Blog's Second Annual Deal of the Year! competition. This year we're presenting awards in three categories--that's 300% more fake prizes than last year!--to highlight the most interesting and creative deal making solutions of the year. The categories are: Big Pharma Deal of the Year, M&A/Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (roughly half a dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

It's not every day that Big Pharmas join forces in an important way. Sure, they might call on each other from time to time to help promote a drug, or to take on some late-stage development cost. But create a joint venture? Pool pipelines and marketing infrastructure? Never.

Not until this year, anyway. So our latest DOTY nominee is the HIV joint venture between Pfizer and GSK, announced in April, and later labeled ViiV.

Ok, so no award for the name. But award the notion: combining GSK's and Pfizer's marketed HIV portfolios and pipelines into a standalone with more clout than either part would have individually, helping reduce both sides' cost, and infusing accountability and productivity in a way that only a smaller outfit can. (Just ask GSK about small-is-better in R&D.) ViiV is run by relatively independent management which makes its own R&D decisions; it can pluck R&D programs from either parent if it likes, but it isn't obliged to.

So this isn't just about fencing off a non-core priority area for both sides (and one that, let's face it, can attract unwelcome controversy), but it's also about sharpening up and making more accountable the HIV scientists. At the same time, GSK wins a bunch of pipeline products from Pfizer (great, since Combivir's heading for genericization), and Pfizer benefits from GSK's commercial clout in the field (great again; just look at the flop that was Selzentry).

ViiV is expected to generate $2.4 billion in sales in its first year; not, then, an immediate threat to leader Gilead (FY '08 sales: $5 billion), but a nice cash cow for its parents--even more so if the whole lot eventually leaves home in a spin-off.

And that's not out of the question. No indeed--"I wouldn't rule it out," Martin Mackay, Pfizer's global R&D head (and on the JV board) told us earlier. And that admission--beyond the actual creation of the JV--warrants a Roger, surely. (Roger always called for disaggregation, remember?)

What's more, if this tie-up works, it might not be the last. "If there's another opportunity to do the same thing again with GSK, we'd do it," said Bill Ringo, SVP BD at Pfizer.

Negotiating the deal wasn't easy, we understand--especially the equity split which is 85%/15% in GSK's favor. But that this happened, and that it may be replicated, should matter to the rest of the industry. It starts to signal the start of more accountable, efficient, collaborative and customer-focused pharma. So vote.

image by flickrer Wolfsoul used under a creative commons license

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