Since the $195 billion merger between rival British drug companies Glaxo Wellcome and SmithKline Beecham (GSK ) closed last December, CEO Jean-Pierre Garnier has moved quickly to ensure that GlaxoSmithKline maintains its leading 6.9% share of the $317 billion global drug business. In the process, the 53-year-old French native is proving that drug mergers, often exercises in value destruction, can work, and work fast.
In GSK's inaugural first-quarter, pretax pharmaceutical profits soared 11%, to $2 billion, on sales of around $7 billion. Diabetes treatment Avandia and recently launched Seretide, an asthma medication, helped fuel profits. At the same time, Garnier, who is known as J.P., has already wrung $580 million in cost savings from overlapping businesses. And the stock? Up 12% since New Year's.
Garnier is determined to make the new GSK "king of science." So he has reshaped the company's massive research and development effort into competing teams to boost productivity. The payoff could be big: The company should launch 15 new drugs by 2005. For J.P., it's just the start.