GlaxoSmithKline deal should ring alarm bells

January 21, 2000

Beecham and Wellcome, the two most resonant names in British pharmaceuticals, will not be the only casualties of the Glaxo Wellcome and SmithKline Beecham merger. Rationalisation will mean job losses.

The firms have promised that money saved by reducing duplication in their Pounds 2.4 million research spend will be reinvested and even added to, producing a research powerhouse.

But this makes it worrying that Glaxo SmithKline will be run from the United States, given political developments in the UK and the US. The Relenza furore (page 24), signalling a tougher approach to new technology and therapies in the National Health Service, has made the UK less attractive to pharmaceutical companies.

In the US, presidential hopefuls talk of putting more money into accessible health care, and research spending is already rising. The combined public and private health-care systems will mean that the US can provide all the road-testing any drug company could require. European competition and merger authorities, the government and the Commons science and technology committee should all be sceptical of claims that GSK will remain largely British. GSK will be a mobile, global business that will conduct its research where it sees fit. The UK, thanks to the NHS, has long been a favoured home for drug research. Keeping it that way is vital and for this, proper funding of universities and health service is an essential prerequisite.

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