GlaxoSmithKline strikes licensing deal with Merck

In a move that is likely to fill its late-stage product pipeline, global pharmaceuticals major, GlaxoSmithKline (GSK), has struck a licensing deal with German pharma major, Merck KgaA. Under the licensing deal, GSK will get the marketing right for Merck's antidepressant drug, currently code-named  EMD-68843 for the US market, while Merck will retain the rights for the European and other markets.

EMD-68843, which is in late stage trials, is likely to hit the market in four years if all regulatory approvals are in place. It is estimated that the market for anti-depressants by then would be approximately $6.5 billion, with nearly 75 per cent coming from the US.

The agreement is a win-win deal for both companies. For GSK, which will see its biggest product in this category, Paxil, go out of patent in 2006, this deal provides the ideal replacement to shore up its top line. Paxil had revenues of $1.9 billion last year.

For Merck, which lacks a significant presence in the US market, the deal provides an ideal way of entering the biggest market for anti-depressants.

The deal also supports GSK's aggressive plans to leverage its huge marketing muscle to license drugs from companies that are either too small or lack the organisation to penetrate the highly competitive US market. GSK has 7,000 sales reps in the US, way ahead of its nearest competitors. GSK has, in recent months, faced problems in its new drug pipeline, when several of its promising drugs have had to be dropped due to damaging side-effects.