GlaxoSmithKline buys Stiefel for $3.6 billion

GlaxoSmithKline’s takeover of Stiefel looks like the kind of deal we are going to see a lot more of as Andrew Witty, the chief executive of the group, seeks to grow the company through smaller “bolt-on” acquisitions and collaborations rather than the sort of mega-deal through which it owes its roots.

Mr Witty is well aware that GSK — in common with all the main pharmaceuticals companies — needs to do something to preserve sales in the face of looming patent losses on key drugs and increasing competition from generic manufacturers. Although some rivals, such as Pfizer and Wyeth, and Merck and Schering-Plough, are choosing to maintain profits through huge cost-saving mergers, Mr Witty has decided that such a large deal would be high-risk and time consuming. So he is opting to build the company one small step at a time.

Mr Witty estimates that GSK can cut about $240 million from the costs of the business that will be created through the integration of Stiefel and its existing dermatology operation.

This tie-up comes only days after GSK announced another deal that we are likely to see a lot more of. In that case, GSK and Pfizer agreed to merge their HIV treatments businesses in a collaboration through which they believe they can cut £60 million a year through combined costs. Slowly but surely, GSK seems to be positioning itself to weather the storm it faces in an industry where competition is increasing, prices are declining and new blockbusters become ever harder to find.

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