Theink is barely dry on its $68 billion merger with Wyeth, but that hasn’t stopped Pfizer from launching yet another deal. On April 16, Pfizer announced it will join forces with Britain’s GlaxoSmithKline to pool their HIV operations to create a new company devoted to marketing the two companies’ existing HIV medicines and developing new ones. The new venture, which will be 85% owned by GSK, will have a 19% share of the HIV market. “This creates the focus of a specialist company with the support of two big parents,” GSK CEO Andrew Witty said in a conference call. “It gives us a huge portfolio—11 medicines on market and 6 in the clinic.” The news comes just a day after Pfizer’s head of worldwide research Rod MacKenzie told a conference in New York that “the big research organization model really doesn’t work particularly well,” calling the “old model” (of which Pfizer was the industry’s biggest proponent) too unwieldy, lacking accountability, and overly bureaucratic. After years of endless mergers and acquisitions to get bigger, now big pharma is intent on getting smaller. The new venture is an attempt by the world’s two biggest drug companies to replicate the energy and drive of a small biotech. Witty calls it an opportunity to “create a specialist company . . . with real independence that will have the flexibility to do other deals and license in other products just as a specialist biotech would.” 

Questions 

1. Why are GSK and Pfizer creating a new “specialist” organization to manage the sale and development of their HIV drugs? 

2. How will the new company be organized? In what ways will it help speed the development of new drugs and reduce costs?