Pullan Consulting

Biotech Business Development Consulting

www.pullanconsulting.com and www.lindapullan.com

email:  lpullan@msn.com  805-558-0361

Issue #31

Pullan's Pieces

Commentary on Science & Business of Drug Development

For Business Development & Others

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A partnering profile of GSK

In this issue, I thought I would try to give you my analysis of the public information on GSK as a partner.  I’d love to hear what you think of partner profiles as an occasional newsletter topic.  (By the way, this is just my synthesis of public information.  GSK had no role in it!)

GSK Vision 

GSK is diversifying and restructuring to be efficient and innovative in a world with fewer blockbusters. 

Although prescription drugs are by far the biggest part of the business, GSK is increasing its emphasis on

·         consumer healthcare products (where it sees growth especially in emerging markets),

·         vaccines (where it sees margins comparable to drugs and the potential for transformation with therapeutic vaccines), and

·         business in Japan (where can take advantage of the 10 years of exclusivity for its pipeline). 

GSK R&D Structure

GSK is attempting to make R&D more entrepreneurial, more like small biotechs, with smaller units with P&L responsibilities.  GSK is also trying new models for interactions with companies and academia.  GSK spends about $1.2B or13.7% of its turnover on R&D.  GSK research is concentrated in Centres of Excellence of Drug Discovery (CEDDs), and there are 8 therapeutic areas (not all of which seem to be full CEDDs):

• Infectious diseases (with 45 projects in preclinical thru Ph 3 in PharmaProjects, includes vaccines)

• Metabolic pathways  (with 23 projects with metabolic as the primary therapeutic area)

• Neurosciences (with 45 projects)

• Respiratory (with 25 projects)

• Immunoinflammation (28 projects as immunological or musculoskeletal)

• Oncology (not a CEDD, but about 1000 people including development and discovery as of Sept 2008) with 20 projects, including cancer vaccines)

• Ophthalmology (only a Phase I AMD project visible)

• Biopharmaceuticals (the former Domantis, with 11 antibodies listed)

In at least the Infectious Diseases CEDD, there is a commitment to a slimmed-down (with layoffs) internal structure and to building their drug discovery portfolio in part through outside deals (“virtualising a portion of its pipeline”). 

GSK has increased external review of research projects with a Drug Discovery Investment Board (with senior GSK leaders and outsiders from venture capital, etc) to review all drug projects and allocate capital.  Teams of 5-80 scientists with 3-year business plans compete internally for those resources. 

GSK Partnering Units

CEEDD:  GSK set up a Centre of Excellence for External Drug Discovery (CEEDD) for option relationships, where the smaller partner companies develop the drugs until clinical proof of concept.  Christoph Westphal formerly CEO of Sirtris (acquired by GSK) is the new head of the CEEDD. 

GSK Corporate Venture Fund was created in 2008, and will invest in start-up incubator companies based on GSK-generated assets and in early stage companies using advanced technology to develop innovative healthcare products. 

GSK 2008 Acquisitions

• Sirtris Pharmaceuticals (sirtuins, enzymes involved in aging) for $720 million in cash.  Sirtris will operate as an autonomous drug discovery unit.  

• BMS’s mature products business in Egypt for $210 million

• Genelabs Technologies for small molecule HCV drug discovery for $57 million

• AZ Tika, a Swedish OTC medicines business owned by AstraZeneca for $211 million. 

GSK 2008 Alliances

GSK’s use of options, allowing a partner to develop the drug until clinical proof of concept, is consistent with their greater entrepreneurial character, and should be attractive to partners.   GSK’s use of University of Cambridge as an academic incubator for drugs from GKS or the University is unusual.  In the collaboration with the Harvard Stem Cell Institute, GSK envisions scientists swaps, with time spent in each other’s lab. 

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How can I help you?

I am happy to do small tasks with no long-term commitment.  Let me help tailor a presentation, make a few contacts, think about valuation or give you some candid feedback. 

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Pullan Consulting

Linda M. Pullan, Ph.D.

Biotech Business Development

www.pullanconsulting.com and www.lindapullan.com

e-mail: lpullan@msn.com

805-558-0361

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