GLAXO SMITH KLINE, one of the largest pharmaceutical companies in Ireland, was this weekend waiting to see by how much the owner of Serono, the Swiss biotech group, is willing to cut the $15 billion (€12.4 billion) price he was seeking for the business.

Glaxo, which is being advised by Morgan Stanley, is believed to have indicated that it is willing to enter into negotiations with Serono but is not prepared to pay much more than $11 billion.

Ernesto Bertarelli, Serono’s chief executive and controlling shareholder, has to decide whether he is prepared to accept a much lower price than he originally wanted. Serono is Europe’s biggest biotech company, and has grown strongly thanks to the success of Rebif, a blockbuster treatment for multiple sclerosis with sales in excess of $1 billion a year.

However, like many larger companies, Serono has struggled to come up with a strong pipeline of future products, limiting its attractions to potential acquirers.

Serono could also soon face a competitive threat from Elan and Biogen’s Tysabri. The Food and Drug Administration Advisory committee will meet on March 7 to issue a recommendation on whether Tysabri, which has been dogged by safety concerns, can be put back on the market.

One source familiar with the sale process said it had reached an impasse. The failure of the company to attract high bids had left Bertarelli and Serono facing a difficult choice.

Glaxo, headed by Jean-Pierre Garnier, has made it clear that its first priority is its own improving pipeline of new medicines. However, because Glaxo is so much bigger than Serono, with a market value of nearly £85 billion (€125 billion), Garnier is confident that he could treat the Swiss firm as a bolt-on acquisition, meaning it could be acquired and integrated without causing disruption to the group. This is one of the biggest concerns posed by “mega-mergers” .

Novartis, the Swiss pharmaceutical giant, was seen as the most likely buyer for Serono but it too appears to have cooled on the idea. Another possibility is Johnson & Johnson, the American healthcare group which has just missed out in a $27 billion bidding war for Guidant, an American devices firm. J&J’s pharmaceuticals business has just reported a rare set of disappointing results.

Serono is being advised on the sale by Goldman Sachs. Glaxo declined to comment.

Serono is due to report its 2005 results tomorrow, which some have seen as a deadline to accelerate the sale process.

Glaxo will report results next week, with investors looking for an update on the progress of its newer medicines. Of particular concern is Cervarix, a cervical cancer vaccine. Glaxo planned to file Cervarix for approval in Europe in the first half of this year, but there are fears it could be delayed.