Pharmaceutical Giants Will End Venture

Glaxo Wellcome and Warner-Lambert Co. said they will dissolve a joint venture formed five years ago to sell over-the-counter products to give the companies greater flexibility in pursuing their own strategies.

Glaxo, the world’s second-biggest drug company, regained rights to sell Zantac 75, an over-the-counter version of its anti-ulcer drug, outside the U.S. and Canada. Zantac, once Glaxo’s best-selling drug, lost its U.S. patent protection in 1997.

The move comes at a time when Britain’s Glaxo is seeking a way of expanding its product offerings. Last week it posted a 21% drop in first-half net income after declines in sales of off-patent Zantac.

“This joint venture has served both companies well at a time when Zantac, one of the most successful medicines in history, was moving over-the-counter,” said Robert Ingram, Glaxo chief executive.

Sales of Zantac 75 in the joint venture were $161 million in 1997, Glaxo said. The venture also had $47 million in sales of cold-sore cream Zovirax and $4 million in Beconase hay-fever treatment.

Financial terms of the dissolution weren’t disclosed. Glaxo said the net asset value of its investment in the venture, to be dissolved by the end of 1998, is $11.4 million. It said it will post an exceptional profit from the dissolution.

In addition to Zantac, Glaxo will gain world rights to the over-the-counter versions of Zovirax and Beconase. It will also retain rights to market all future products that may switch from prescription to over-the-counter use.

With a new “regionalization” strategy, Ingram said Glaxo will have greater ability to market over-the-counter drugs on its own, although it said its “core strategy” remains in prescription drugs.

Warner-Lambert, based in Morris Plains, N.J., will retain rights to sell Zantac 75 in the U.S. and Canada.

“The unwinding of the joint venture will provide both parties greater flexibility to continue the growth of their respective businesses,” said S. Morgan Morton, president of Warner-Lambert’s consumer health-care sector.

In New York Stock Exchange trading, Warner-Lambert shares rose 6 cents to close at $75.44, Glaxo’s American depositary receipts rose 19 cents to $61.