- Andrew Witty, the CEO of GlaxoSmithKline, isn't particularly impressed by biopharma's M&A frenzy. He feels that companies are getting in on this action because money is cheap, not because of the true value of their acquisitions.
- Since January 2014, there have been $460 billion worth of M&A deals in the biopharma industry.
- Although Witty feels that the M&A frenzy is overheated, GSK made its own deal last year, when it completed a $23.05 billion asset swap with Novartis, in which it exchanged its oncology assets for Novartis's vaccine assets.
The sheer volume of the M&A activity in the biopharma industry is noteworthy, and when you add in the dollar values involved, it becomes clear that not every deal reflects a high-value proposition. When interviewed by FiercePharma, Witty said, "Either only a few will make it and you get really good rewards, or lots will make it, in which case competition is going to bring the price down. In either scenario, the model that says everybody succeeds and everyone gets maximum returns doesn't work."
In many ways, GSK is forging a different path from most of its competitors, pursuing moves such as shedding its oncology assets for vaccines, while other companies breathlessly pursue oncology. At the same time, GSK has intensified its current commitments through a series of definitive actions, including maintaining its ownership share in Viiv Healthcare, while also partnering with researchers at UNC to develop a cure for HIV.
Its seems that GSK has a plan that goes beyond M&A—and the company needs it.