Bad Drug Interaction

LONDON: The corporate marriage of the century is off. Citing "insurmountable differences" in management philosophy and corporate culture, British pharmaceutical giants SmithKline Beecham and Glaxo Wellcome have stopped negotiations on what was to be the biggest merger ever, creating a single company worth around $164 billion.

In an industry where bigger is definitely better, the two behemoths seemed an ideal match. Expensive medical technologies like genetic engineering, combined with tougher FDA requirements, have made the cost of developing a single drug between $400 and $600 million -- about four times what it was 20 years ago. A combined Glaxo and SmithKline could have sunk $3 billion into research and development, compared to $1.8 billion for Novartis AG and $1.5 billion each for Merck & Co. and Pfizer Inc.

But according to a SmithKline spokesman, Glaxo tried to change the terms of the tentative deal announced Jan. 30 -- a deal that was then sweet enough for SmithKline to call off a merger with American Home Products Corp. No word on whether those two will reunite, but Monday's breakup had a Glaxo spokesman sniffing, "We're not actively looking for another merger partner." Glaxo's and SmithKline's stock price both soared with the first announcement; on Tuesday, the stocks had plunged a combined 14 points by midday.