Andrew Witty is sticking to his guns. While rivals have begun a series of mega-mergers, GlaxoSmithKline’s chief executive has insisted that he wants to do things differently. Mr Witty has said he favours instead a more gradual approach to easing the UK’s biggest pharmaceutical company down its patent cliff.

Two pieces of this strategy have fallen into place. Monday’s $3.6bn deal, including assumed debt, to buy Stiefel Laboratories, a Florida-based maker of acne creams, will add more than 200 products and a specialist sales force to GSK’s existing $500m dermatology business.

GSK reckons it can save $240m a year by 2012 by combining with Stiefel – although $325m of integration costs will consume some of those savings. More important, access to Stiefel’s product portfolio will edge the group away from its reliance on blockbuster drugs. With combined revenues of about $1.5bn last year, GSK and Stiefel together account for about 8 per cent of dermatology sales.

The other piece of Mr Witty’s strategy, an HIV joint venture agreed with Pfizer last week, allows two of the world’s biggest pharma groups to pool research and share

development and marketing costs for 11 existing medicines, with GSK taking an 85 per cent equity stake in the venture.

GSK, formed by a merger between Glaxo Wellcome and SmithKline Beecham in 2000, knows size alone is no cure-all. Cost cutting in the wake of recent deals, such as Pfizer’s $68bn purchase of Wyeth and Merck’s $41bn takeover of Schering-Plough, will help offset the fall in revenues as drug patents expire. But such tie-ups are unlikely to speed progress towards new cures. GSK’s approach is different, but the destination is the same. Drugs companies are destined to become lower-margin, lower-risk business, biding their time in the hope that new drug discoveries give them fresh advantages over rivals.

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