GlaxoSmithKline and Pfizer choose to collaborate on HIV drugs

Tuesday, November 03, 2009

Here is an excellent highly relevant article on cooperative behaviour between oligopolistic giants. Two of the world’s biggest drugs companies GlaxoSmithKline and Pfizer have announced a plan to merge their HIV treatments in a joint venture. ViiV Healthcare is an attempt for both companies to limit the risks of costly races to find new profitable treatments for HIV/aids and give them an opportunity to counter the loss of the revenues as these companies lose patent protection and are open to competition from generic drug makers. It is a strong reminder of the very high fixed costs of research into new drugs; the long lead times between new drug development, testing and finally getting it to the market. And also the impact of the entry of generic drugs into markets once patent protection runs out. The new company has a 19% share of the global drugs market, in comparison to the Californian company Gilead’s 31%.

Drug firms’ collaboration pools HIV treatments (Independent)

IPO of HIV business is ‘up to shareholders’ (Telegraph)

Posted to A2 Micro • Business Economics • Oligopoly • Teaching of Economics
Tags: competition, risk, costs, profit, oligopoly, joint venture, patent, pfizer, collaboration, glaxosmithkline
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