Glaxo: 20 new major drugs planned
LONDON, England (Reuters) -- GlaxoSmithKline said on Wednesday it had 20 potential $1 billion-a-year blockbuster drugs in its pipeline to drive future sales growth and lift it out of a lean patch for research productivity.
Europe's top drug maker identified novel medicines for heart disease and cancer, an area where it has traditionally been weak, as well as treatments for lung disease and new vaccines, among possible winners at a long-awaited research meeting.
GSK has been dogged by a reputation for a weak late-stage pipeline ever since its creation through the merger of Glaxo Wellcome and SmithKline Beecham three years ago.
But the group said a new research structure introduced since the merger had improved drug discovery significantly and it expected to make a record number of drug approval filings with regulators over the next five years, including 16 in 2004 to 2005.
"We also have multiple blockbuster opportunities,'' Chief Executive Jean-Pierre Garnier said.
"I define blockbuster as a product with peak sales exceeding $1 billion. We have counted among the 35 (products) that you will hear about today, 20 of them fit that description.''
Shares in GSK, which have outperformed the sector in recent weeks ahead of the meeting, rose initially but then fell back to stand 1.2 percent lower at 13.14 pounds by 1147 GMT as investors concluded there were few surprises in the presentation.
There was also disappointment that the filing date for a promising new cancer pill for breast and other solid tumors, known as a dual-kinase inhibitor, had been pushed back to 2005 from 2004.
Track record
Industry analysts said that, while the line-up of new opportunities was impressive, many of the most promising products were still several years away from the market and could yet fail in late clinical trials.
"It must be the biggest pipeline in the industry, with a lot of stuff coming through towards the end of the decade,'' said Jonathan de Pass, head of independent pharmaceutical consultancy Evaluate.
"Now they've got to demonstrate that the poor track record they've had in the past is not going to be repeated and that they can actually get these products to the market.''
Wednesday's meeting was the first of its kind since February 2001 and was viewed as crucial in showing whether GSK's $4.5 billion-a-year R&D engine has finally achieved a step change in productivity.
With sales of antidepressant Paxil and other one-time best-sellers savaged by generic competition, it badly needs new products to close the gap.
In addition to the dual-kinase cancer treatment, GSK is working on a vaccine to prevent cervical cancer which is slated for regulatory submission in 2008.
Another high-profile product for atherosclerosis, or hardening of the arteries, is also likely to be filed in 2008, potentially taking an key slice of the huge anti-cholesterol market currently dominated by Pfizer Lipitor, which sold $8 billion in 2002.
New research model
Garnier said GSK would build a top-tier pipeline, driven by its new model of quasi-autonomous Centres of Excellence for Drug Discovery (CEDDs).
These small-scale units of 300 to 400 scientists, each focused on a specific area of research, were set up to promote the kind of entrepreneurial culture found inside biotechnology companies.
Investors have been waiting for evidence that the structure is delivering before awarding the stock a higher rating. The shares currently trade at around 15 times consensus 2004 earnings, based on Reuters Research data, against more than 22 times for smaller British rival AstraZeneca.
Keith Burdon, investment manager at Britannic Asset Management, said headline impressions were good but that investors would still need to see full clinical data on key drugs as they progress through lengthy studies.
"Glaxo has been saying for a long time that they've got a new approach to R&D with its centers of excellence for various areas, in the hope that those will become more prodigious in generating new products, and that seems to be the case so far,'' he said.
Making the CEDD model work is essential to the group's future.
Deutsche Bank calculates that GSK's pipeline will have to generate drugs with 2010 sales of between 5.5 billion and £8 billion ($9.5-13.8 billion) if it is to overcome the next wave of patent expires in 2006-10.
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