SmithKline, and the science base, avoid an iceberg

Time has a way of playing tricks on monthly magazines. In our last issue, we reported on a proposed merger between the drugs companies SmithKline Beecham and American Home Products; by the time you read it, the talks had been called off and SKB was locked in discussions with an even bigger suitor Glaxo Wellcome. As this issue of PEwent to press, these talks had also broken down, with SKBciting irreconcilable differences. Glaxo is maintaining a tight-lipped silence.

The sudden falling-out of two companies that had been on the verge of climbing into bed together also shows how fast things change. It appears that the chemistry between Richard Sykes, the chairman of Glaxo, and Jan Leschly, his opposite number at SKBand senior to Sykes when both men worked at Squibb in the 1980s, was not as strong as they thought. Sykes has a distinctly predatory reputation after boardroom manoeuvres at Glaxo, followed by the hostile takeover of Wellcome, and perhaps Leschly did not relish the prospect of SKBplaying the Titanic to Glaxo Wellcome's iceberg. Leschly's future must now be in doubt, however to call off one set of merger talks might be seen as a misfortune; to call off two looks like carelessness. We wouldn't be entirely surprised to be reporting on a hostile takeover bid for SKBin a forthcoming issue.

The merger was lauded to the skies by the financial community the pharmaceutical industry is so fragmented that even this huge merger, creating the second-largest company of any type in the world, would have controlled less than 10 per cent of the drugs market, and the two companies' product portfolios seemed to fit together well. But for the employees, particularly in the UK, the picture would have been very different. A significant proportion of pharmaceutical workers in the UK, including many process engineers, would have been working for a single company; it would also have dominated the recruitment of scientific graduates. It's difficult to see how this would have benefited the UK's science base, which many including Richard Sykes perceive as being in trouble (see News in Brief, p9).

With the merger called off, the business of the two companies will continue much as usual. The synthesis and formulation plants will churn out their tablets, capsules and potions; the laboratories will investigate the workings of the body and develop new active ingredients to treat new diseases. And the billions will continue to roll in.