Glaxo, Novartis Go Head-to-head

VACCINE BUSINESS

In its second recent move to acquire vaccine assets, GlaxoSmithKline has agreed to acquire ID Biomedical, a Canadian biotechnology firm that develops and manufactures vaccines, in a stock deal valued at $1.4 billion. A week earlier, GSK announced that it will purchase Wyeth's vaccine plant in Marietta, Pa., for an undisclosed amount.

Meanwhile, Novartis last week was expected to increase its bid for the shares of vaccine maker Chiron that it does not already own. Last Monday, Chiron's independent directors rejected Novartis' Sept. 1 bid of $40 per share, or $4.5 billion, as "inadequate." Novartis has owned 42.2% of Chiron for 10 years.

Chiron held about half of the U.S. influenza vaccine market prior to problems at its U.K. plant last October. FDA recently okayed the plant, but Chiron now faces competition from a new GSK flu vaccine.

Karl H. Koch, a stock analyst with Lombard Odier Darier Hentsch in Switzerland, says Novartis will likely come back with a bid as high as $45 per share. Koch explains that Chiron cannot expect to regain all of its lost U.S. market share because of competition from GSK. But, he says, there are cost savings to be gained by Novartis in integrating Chiron.

"These things set each other off, so that Novartis will have to pay a price similar to what Chiron was trading for before the vaccine problems," Koch tells C&EN. Chiron's stock traded in the mid-$40s through much of 2004.