Update: Glaxo, SmithKline Merge in $187B Deal

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Marketers of healthcare products and services reacted calmly to this week's announcement that drug manufacturing giant Glaxo-Wellcome, Research Triangle Park, NC, had agreed to acquire SmithKline Beecham, Philadelphia, in a stock swap deal that would create a mammoth drug manufacturing force reportedly worth $187 billion.


But government and healthcare policy leaders responded with far more caution against a backdrop of protests by the Washington advocacy group Public Citizen, along with reminders by President Clinton that 44 million Americans are without health insurance. And with the dust still settling from last week's announcement that America Online, Vienna, VA, will merge with TimeWarner Inc., New York, there also was a chilly reaction from Wall Street, where concerns are still lingering about reported talks between Warner-Lambert, American Home Products and Procter & Gamble Co. as well as an ongoing attempt by Pharmacia & Upjohn Inc. to buy Monsanto Inc.


In the case of Glaxo-SmithKline, analysts said the merger will result not only in the world's largest pharmaceutical company, but one representing nearly 8 percent of the entire global prescription drug trade. But analysts said the day-to-day marketing of prescription drugs for the foreseeable future - both in the online and offline worlds - will likely remain unchanged.


"Ultimately, these companies are manufacturers of medications," said David Restrepo, an analyst at Jupiter Communications, New York. "They all sell through a variety of channels. Pharmacy benefit managers are the ones that may see some change because it's the PBMs who negotiate with the pharmaceutical companies on behalf of the HMO's and [other third parties].


"It really just means [PBMs] will have to negotiate with a larger company," he said, a dynamic that may slightly thwart the companies' acceptance of more integrated customer relationship management programs via the Internet.


Healthcare marketing expert Gil Bashe, who was picked this week to head healthcare communications network Health!Quest Global Communication Partners, Metuchen, NJ, said Glaxo and SmithKline's history of innovation may ultimately become part of the new company's marketing culture.


"I don't think this is going to stifle competition or how products [are marketed] or brought to the market," Bashe said.
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