Glaxo raises pounds 580m for Warner-Wellcome stake

Glaxo Wellcome, the giant drugs group, yesterday sold most of its share of the Warner Wellcome non-prescription drugs business, inherited with its pounds 9bn acquisition of Wellcome last year, for $900m (pounds 580m). The deal involves the immediate transfer of the UK and US ends of the operation. Purchase agreements for interests in Canada, Mexico, Australia and New Zealand expected to be signed in the third quarter, will bring in a further $150m (pounds 97m).

The proceeds will be used to net debt which stood at pounds 3.2bn at the end of December. Taking account of repayments since then, the new money will reduce that figure to around pounds 2.4bn. Although Glaxo's share of the business being sold contributed pounds 74m to profits in the 18 months to December, its disposal is not expected to have any effect on future results.

The assets include over-the-counter medicines such as as Sudafed, Actifed, Neosporin, and Nix. Glaxo will, however, retain its holding in a separate Glaxo Warner Lambert joint venture set up in 1993 to market over-the-counter versions of Glaxo's prescription drugs. Separately, Glaxo Wellcome, headed by Sir Richard Sykes, yesterday announced the signature of a development deal for a potential new anti-AIDS treatment with Vertex, a Massachusetts- based drug discovery company. The two companies have obtained a non-exclusive licence to the protease inhibitor code-named 141W94 from GD Searle, the pharmaceuticals subsidiary of the US group Monsanto. Glaxo will pay $15m and Vertex $10m for the licensing rights, while, separately, the British group has made a $5m equity injection into Vertex.

The drug, designed by Vertex, is one of a new generation which inhibits replication of the HIV virus. Several compounds based on protease inhibitors have recently won approval in various world drug markets. Initial trials on 141W94 have been promising and Glaxo started a combined phase I-II trial in December.