Pfizer Still Ahead Following GlaxoSmithKline Merger

The merger of Glaxo Wellcome and SmithKline Beecham, completed on 27 December 2000, will create the world's second largest pharmaceutical company. The new company will have global pharmaceutical sales of over $22bn and will have the largest share in several therapeutic areas, including anti-infectives, CNS, respiratory and alimentary & metabolic, as well as holding a leading position in the vaccine and OTC markets.

However, Pfizer will retain the honour of being the largest pharmaceutical company in the world, which it acquired after its merger with Warner-Lambert in July 2000.

According to IMS HEALTH data for the twelve months to 30 September 2000, the merged GlaxoSmithKline (GSK) pharmaceutical business would be ranked number two by worldwide sales, with a global market share of 6.9%, marginally behind Pfizer's 7%.

GSK's figure includes sales of SmithKline Beecham's Famvir, Kytril and Vectavir, which will be divested as a condition of the merger. Without these products, GSK's market share would be 6.7%. Pfizer's figure includes sales of Rezulin, which was withdrawn in March 2000. Without this product, Pfizer's market share would be 6.9%.

In terms of global market share, the top two firms will open a significant gap between themselves and the other leading pharmaceutical companies. For instance, third-placed Merck & Co is two percentage points behind Pfizer in global market share. In the near term (ie discounting organic growth), for Merck to rival the top two it will have to acquire at least one of the 15 leading pharmaceutical firms in the world - a smaller acquisition would not gain it sufficient market share to overtake Pfizer.

*MAT September 2000. GlaxoSmithKline sales include divested products Famvir, Kytril and Vectavir. Pfizer's sales include withdrawn product Rezulin.
Source: MIDAS

Global Presence

According to IMS HEALTH September 2000 data, 68.1% of Pfizer's sales are generated in the high-growth North American market, compared to 56.6% of Glaxo Wellcome and SmithKline Beecham's combined sales. With the US market expected to continue to grow faster than the rest of the world (see USA Leads the Way), Pfizer's greater reliance on this region can be seen as a strength.

However, GSK will arguably be a more "global" company than Pfizer, given that it will generate a far higher proportion of its sales outside the North American market. SmithKline Beecham's presence in the Central and South American markets will be complemented by Glaxo Wellcome's strong position in Europe and Asia.

GSK will be ahead of Pfizer in every region other than North America. GSK generated a relatively high $6.0bn, or 26.6% of its sales, in the European market in the period from October 1999 to September 2000, compared to Pfizer's $3.8bn (16.9%). The region in which Pfizer's market share is closest to GSK's is Africa, Asia and Australasia; this is due mainly to Pfizer's strong position in the large Japanese market, which has been targeted by Pfizer for future growth.

*MAT September 2000.
Source: MIDAS