 
|
by Anthony Manduca
The international merger between Glaxo and SmithKline, two of the world's largest pharmaceutical companies, is unlikely to affect the local representation in the short term. This is because Malta is such a small market in the global economy that such mergers usually have local repercussions some years after the event. SmithKline is represented in Malta by Alfred Gera & Sons while Glaxo is represented by Spiteri Maempel Ltd. A spokesman for Alfred Gera & Sons confirmed to The Malta Business Weekly that the merger was unlikely to have any local effect for the moment.
When Glaxo merged with Welcome a few years back, there were two local agents for these companies, Spiteri Maempel and George Borg, and today these agents bothj represent the merged company. International mergers usually raise some eyebrows in Maltese business circles because of the possibility of one of the agents losing his representation. This has happened mainly among local importers of wines and spirits, but is not common among importers of medicines and pharmaceutical products.
The newly named Glaxo SmithKline company has meanwhile confirmed it would move the operational headquarters of the merged company to the US, raising the spectre of a gradual drift overseas of Britain's pharmaceuticals industry.
The company, set to be the biggest drugs group in the world, will be based in the UK, where about three-quarters of the combined group's shareholders are based. But it will be run by Jean Pierre Gamier, chief executive designate, from a US operational base, probably in New Jersey.
"The new company is global, proud of its roots in the UK and of its corporate domicile in the UK," Mr Gamier was reported as saying in the Financial Times . "But a world class competitor cannot operate all of its functions from a market that represents only six per cent of its existence."
Strategic decisions would be taken in the US but that would not mean a wholesale transfer of jobs from the UK, he said.
Sir Richard Sykes, the Glaxo chairman who will take a non-executive role in Glaxo SmithKline, said the new company would stay British, but a shift to the US was inevitable given the size of the market.
Last year Sir Richard, who has championed UK science, became embroiled in a spat with the government over its decision to ban the use of Glaxo's flu drug. He warned then that Britain was becoming a less attractive location for drugs companies.
The UK government made no comment. but insiders said there vas "concern" about the location issue. The deal will be scrutinised in Brussels, with little prospect of the UK government being able to repatriate it.
Any drift from the UK would be gradual. AstraZeneca, one of the top five drugs company by market share, is based in London and there is a thriving biotechnology sector. The industry is the most important in terms of exports after arms.
The transaction will be conducted on the basis of 0.4552 SB shares for each Glaxo SmithKline share, giving SB shareholders 41 1/4 per cent of the new company. Some analysts observed Glaxo shareholders had done better than expected, but SB had taken the plum management jobs.
The merged company will have annual sales of about £17bn (US$28bn) and a global market share of 7.3 per cent, half as much again as its nearest competitor Merck. Sir Richard said the "global powerhouse" would have an R&D budget of £2.4bn.
Glaxo was advised by Goldman Sachs. SmithKline's adviser was Morgan Stanley Dean Witter.
|
