U.S. OKs Britain Drug Cos. Merger

Monday, December 18th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Antitrust regulators approved the merger of British drug companies Glaxo Wellcome PLC and SmithKline Beecham PLC Monday, paving the way for the creation of the world's largest pharmaceutical company.

The Federal Trade Commission gave its blessing to the $72 billion deal after requiring a series of divestitures in markets where the companies offer overlapping products.

Without the agreement to sell off some drugs, competition would have been eliminated or substantially reduced in those markets â€” potentially raising prices for consumers, the government said.

``The proposed divestitures will lead to continued competition in these critically important pharmaceutical markets,'' said Richard G. Parker, director of the FTC's bureau of competition. The consent order also ``will ensure that competition occur in the future in the markets where pharmaceutical products are not currently available.''

SmithKline already has agreed to shed the antiviral drugs Famvir, used to treat shingles and genital herpes, and the cold sore remedy Denavir because Glaxo has similar drugs sold as Valtrex and Zovirex. SmithKline's drugs will be sold to Novartis AG.

Glaxo will divest the trademark rights for its blockbuster ulcer drug Zantac 75 to another giant, Pfizer, which currently markets Zantac in the United States. That's to prevent overlap with SmithKline's heartburn medicine, Tagamet. The U.S. market for these over-the-counter drugs totals $502 million, according to the FTC.

SmithKline had also previously announced plans to sell Kytril, a drug used by chemotherapy patients to fight nausea. Without that sale, the combined company would have had 90 percent of all sales in the $778 million market for those treatments, because Glaxo Wellcome markets Zofran for chemotherapy.

The government consent order also requires divestitures of an antibiotic used in hospitals, and addresses existing agreements the companies have with other firms for drugs to treat migraines and tumors.

The merged company, which will be known as GlaxoSmithKline, must still be formally approved by the British High Court on Wednesday.

The FTC also said it would continue to investigate the impact of the merger on drug products aimed at helping smokers quit. Glaxo markets the prescription smoking-cessation product Zyban while SmithKline sells over-the-counter products Nicorette gum and the Nicoderm patch.

The merger had already won regulatory approval from the European Commission in May. It was endorsed by both companies' shareholders at meetings held on July 31, and is on schedule to be complete on Dec. 27.

Glaxo has its U.S. headquarters in Research Triangle Park, N.C. SmithKline's U.S. headquarters is in Philadelphia.

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On the Net: SmithKline Beecham: http://www.sb.com

Glaxo Wellcome: http://www.glaxowellcome.com