GSK Chief Executive Sir Andrew Witty has ruled out a takeover bid for AstraZeneca.
Sir Andrew told shareholders at the company’s annual general meeting yesterday not to expect any major takeovers in the future as GSK focuses on the potential of its pipeline.
In response to a question over a possible merger, Sir Andrew said a deal for AZ would be “very distracting” at a time when experimental drugs in its pipeline are entering an exciting period.
The future of AstraZeneca remains uncertain as the company battles against generic competition, setbacks in drug development and the loss of its CEO David Brennan after he retires on June 1.
Revenue was down by 8% in the first three months of this year at AZ with sales in the US, Western Europe, Established Rest of the World and Emerging Rest of the World all falling.
David Brennan announced his retirement to coincide with the publication of the Q1 results after admitting that the pharmaceutical sector is “experiencing pressures none of which I’ve witnessed in my 36 years in the industry”.
AZ shareholders had criticised his leadership in recent years after the company had failed to compensate for the loss of revenue with mergers and acquisitions.
As a result, industry analysts have speculated that AZ may become a takeover target for one of pharma’s biggest companies.
A merger of GSK and AZ, the two largest pharma companies in the UK, would provide big cost savings. It led one GSK shareholder to raise the issue with the Chief Executive claiming it would be more effective than the recent $2.6bn offer for Human Genome Sciences.
Sir Andrew said GSK believes it can “deliver an extraordinary return to shareholders through this acquisition. I think we waited until exactly the right moment to make this offer, but nonetheless this is a compelling offer for shareholders at HGS to consider,” he said.
The $13 per share offer was rejected by HGS – who have now instructed Goldman Sachs and Credit Suisse to help explore strategic alternatives to GSK’s bid. Sir Andrew declined to comment on whether he had made contact with HGS’ management since GSK’s offer was rejected.