andrew jack, ft.com: glaxo smithkline, pfizer form ViiV to fight HIV/AIDS (0075)

ViiV vows joint venture
will help fight HIV

By Andrew Jack
November 3 2009

The new head of the pioneering HIV joint venture between GlaxoSmithKline andPfizer predicts his company can operate for at least five years without fresh funding from its shareholders. Dominique Limet, chief executive of ViiV Healthcare, which was formally launched on Tuesday, says it will generate £1.6bn a year in sales to finance its own research and would begin paying a dividend to its two owners in 2011 as it sells new products.

“By being 100 per cent dedicated to HIV, we will reach more patients and do much more than either company on its own, with more products, more reach and more focus,” he says, stressing how the field is evolving as patients with HIV age and develop other illnesses that need to be treated in different ways. The joint venture, first outlined by the two large pharmaceutical groups in April, has been hailed by some as a clever way of sharing the risks and costs of drug development. But others view it more critically as a way for its parent companies to gradually withdraw from the field. Gbola Amusa, pharmaceuticals analyst with UBS in London, says: “This could well go down as one of the most innovative and important deals in pharma in the past 10 years. This is an out-of-the-box way to handle industry’s biggest issue: excess capacity.” ViiV, initially 85 per cent controlled by GSK and 15 per cent by Pfizer, combines the former’s well-established group of existing HIV medicines with the latter’s portfolio of drugs, which are largely still in development. The advantages for GSK include boosting future sales and keeping its marketing and manufacturing facilities in business, as its own drugs move towards patent expiry, while for Pfizer it avoids creating a new infrastructure as it seeks to refocus activities and cut costs. The arrangement allows the partners to share the risks and uncertainties of new drug development and to combine forces in a therapeutic field in which combinations of different medicines are essential to tackle disease. Mr Limet also stresses that creating a smaller company focused on a single therapeutic area will rekindle the spirit of innovation by allowing “nimbler responses”. ViiV will initially have 500 staff, plus be able to call – for a fee – on an extra 600 staff from its parent companies. However, he enters the HIV market at a difficult time. Pressure from activists and competition has slashed prices for antiretroviral therapy in the developing world, albeit while boosting total volumes. The science remains challenging, with Roche recently pulling out of the field entirely. Rivals are also expanding with their own therapies established using alternative approaches to partnership. The combined portfolio of HIV therapies from Pfizer and GSK – one of the pioneers in the field – is now only about 19 per cent of the global market of $8.4bn (£5.1bn), far behind the leader Gilead of the US, with 31 per cent. Gilead has combined its own medicines with those of other developers includingBristol-Myers Squibb, mixing them together to produce treatments such as Atripla. Theoretically, ViiV is just as free to forge alliances with third-party developers of medicines. It could have first right of refusal on new drugs in early stage research at GSK and Pfizer, once they show promise in initial trials. In practice, the dominance of its partners may hamper such freedom. Mr Limet says there are no current talks with any other partners to license their medicines, nor to seek other external funders or bring in non-executive directors other than those from GSK and Pfizer. That raises a final issue: whether in the long term Pfizer and GSK could seek to sell off their joint venture and leave the field entirely. GSK said there was no such “exit strategy” being considered. Mark Harrington, head of Treatment Action Group, a New York-based charity, says: “We want to know if they’re trying to spin off a less profitable line to focus on more lucrative targets. “We’d love to be proved wrong here. With ever earlier recommendations to treat HIV, novel compounds for treatment and prevention are urgently needed.”

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