Exclusive: Glaxo CEO says moving towards new share buyback

By Ben Hirschler

LONDON (BestGrowthStock) – GlaxoSmithKline (GSK.L: ), faced with a relative dearth of good acquisition opportunities, is likely to return cash to shareholders through a new buyback program, its chief executive said on Monday.

“The time when you start to see us move back toward share buyback, clearly that moment is inevitably coming forward,” Andrew Witty told Reuters in an interview.

Britain’s biggest drugmaker has until now been reluctant to restart a share repurchase program. It has preferred instead to retain maximum flexibility to strike deals, as well as keeping funds available for legal liabilities.

That could be about to change, Witty said, given the low rate of bolt-on acquisitions made by the group this year and the likelihood that deals which meet its strict hurdles for return on investment will remain hard to find in 2011.

“If you asked me to forecast, I’d say the trend is that there are going to be less (acquisitions). I think we are in a period where they are more difficult to get at the levels we would be prepared to pay,” he said.

Monday’s 162 million pounds ($266 million) purchase of privately owned protein-drinks firm Maxinutrition is a relative rarity for Glaxo and its small scale will barely move the dial for the drugs giant.

Like other big drugmakers, Glaxo has been hit by generic competition for some of its top products. But it is further through its wave of patent expiries than many rivals, which means it is now under less pressure to buy in sales growth.

BENLYSTA HOPES

Witty said he was “cautiously optimistic” about Benlysta — potentially the first new drug for lupus in 50 years — despite a three-month delay in a U.S. approval decision on the medicine, which is being developed with Human Genome Sciences (HGSI.O: ).

“I’m not happy about any delay. But I’ve not seen anything that makes me concerned,” he said. “I’m not aware of any specific question or anything like that.”

Witty, who took over as CEO in May 2008, has set a goal to diversify Glaxo by moving deeper into consumer healthcare and emerging markets.

He has also pioneered a more flexible approach to drug pricing — something he aims to build on as the company pushes into rare diseases, a field which is attracting growing interest from major pharmaceutical companies.

Currently, some medicines to treat rare diseases that affect only a few thousand people can cost hundreds of thousands of dollars per patient a year.

“We want to bring those medicines to market at a very significantly lower price point to the typical rare disease orphan drug price point,” he said.

“I would love us to be a position where we could bring prices in at maybe a quarter or maybe a fifth of prices which are out there today.”

(Additional reporting by Kate Kelland and Paul Sandle; editing by Alexander Smith)

Exclusive: Glaxo CEO says moving towards new share buyback