GSK pays $1.4b for HIV treatments

GlaxoSmithKline has ended a frenetic week for the pharmaceutical sector with a $1.4 billion takeover of HIV drug development assets from Bristol-Myers Squibb.

ViiV Healthcare, GlaxoSmith-Kline's HIV business, will acquire two operations specialising in late stage treatments and early phase medicines. It is the latest acquisition in a record year for pharmaceuticals.

Global deals have reached $677.5 billion, according to Dealogic, up 64 percent on 2014. Healthcare companies have been forced to buy or swap assets to bolster growing areas of their businesses and shore up their defences as generic versions of previously patented medicines are released in the market.

Sales of Advair, an asthma treatment and a bestseller for GSK, are expected to decline following the introduction of a generic version in the US.

In the first nine months of the year, GSK reported that sales of Advair fell 19 percent to £1.2 billion, whereas sales of HIV treatments rose 56 percent to £1.6 billion.

The company had considered spinning off its 80 percent stake in ViiV Healthcare through a flotation that could have valued the business at £18 billion. However, it decided to hang on to the operation in May.

GSK said it would make an upfront payment of $317 million to buy Bristol-Myers Squibb's late stage HIV drugs, with a further $518 million dependent on sales and royalties. The assets include Fostemsavir, which treats HIV infection and is at the final phase three development stage. That means that it can seek regulatory approval, which is expected to be filed in 2018.

It will also pay an initial $33 million to acquire pre-clinical and early stage research assets and could hand over $587 million if certain development and sales goals are met.

Earlier this week, AstraZeneca said it would spend $4 billion to buy a 55 percent stake in Acerta Pharma, a US-Dutch company which is developing a leukaemia treatment that is at the phase three stage. It has an option to buy the remaining 45 percent in the company.

AstraZeneca, which last year saw off a £69 billion takeover bid from US rival Pfizer, also announced it would acquire a number of respiratory medicines from Japan's Takeda for $575 million.

This year has been marked with major deals in the pharmaceuticals sector. Last month, Pfizer announced a $160 billion merger with Botox-maker Allergen while in March, GSK said it would swap its cancer drugs portfolio with Novartis' vaccines business.