British pharma giant GlaxoSmithKline plc is close to acquiring privately-held Stiefel Laboratories, Inc. for about $3 billion. The companies are in late stage talks, with an announcement on the deal expected on Monday, although there is a chance that the deal could fall apart. There has been no official confirmation from both the companies on the deal.
The Coral Gables, Florida-based Stiefel Laboratories is the world's largest privately held pharmaceutical company, and the owner of Barrier Therapeutics Inc. (BTRX), which it bought in August 2008 for $148 million. In 2006, Stiefel acquired Connetics Corp., a drug company specializing in dermatology, for about $605 million. Private-equity group Blackstone Group LP (BX) invested $500 million in the company in 2007 to own a substantial minority stake in it. Founded in Germany in 1847 by John David Stiefel, the company specializes in dermatology.
Stiefel Labs, which makes anti-itch creams, acne treatments and other dermatological remedies to help treat acne, dry skin, dandruff, psoriasis and rosacea among other disorders, generates annual revenue of about $1 billion.
Stiefel drew interest from a number of major global drug companies, including Sanofi-Aventis SA (SNY), Johnson & Johnson (JNJ), and Novartis AG (NVS) after it was reportedly put up for sale in March this year. The proposed deal is the latest in an increasing wave of multi-billion takeovers announced since the beginning of this year in the pharmaceutical industry.
The pharmaceutical industry is recently witnessing consolidation on a large scale as cash-rich drug companies are going behind their rivals to boost their weak product pipelines, in order to overcome the impact of expiring patents on blockbuster medicines and generic competitors.
So far this year a number of deals have been announced. In March, Merck & Co., Inc. agreed to buy rival Schering-Plough Corp. for about $41.1 billion, and Swiss pharmaceutical giant Roche Holding AG (agreed to pay $46.8 billion to acquire the remaining 44% stake it does not own of biotech pioneer Genentech, Inc.
Also in March, Gilead Sciences, Inc. agreed to acquire CV Therapeutics, Inc. for about $1.4 billion. Earlier, the year began with a bang, when drug giant Pfizer, Inc. agreed to acquire Wyeth for about $68 billion in late January, in a deal that is expected to create a pharmaceutical behemoth with combined revenue of about $75 billion.