April 16, 2009 GlaxoSmithKline

GlaxoSmithKline and Pfizer announce innovative agreement to create a new world-leading, specialist HIV company

GlaxoSmithKline plc (GSK) and Pfizer Inc (PFE) today announced they have entered into an agreement to create a new world-leading HIV company focused solely on research, development and commercialisation of HIV medicines. The new HIV business will be more sustainable and broader in scope than either company's individually, and will hold a 19% share of the growing market and have an industry-leading pipeline.  GSK will initially hold an 85% equity interest in the new company and Pfizer will hold 15%.

Andrew Witty, Chief Executive Officer, GSK said: "Today marks a definitive step by GSK to renew our focus and deliver more medicines, more efficiently, to people living with HIV/AIDS. At the core of this specialist business is a broad portfolio of products and pipeline assets, which can be more effectively leveraged through the new company's strong revenue base and dedicated research capability. HIV remains a global threat with increasing incidence and viral resistance. This new company will be better placed to meet these challenges and improve access to treatments."

Jeff Kindler, Chief Executive Officer, Pfizer said: "By combining Pfizer's and GlaxoSmithKline's complementary strengths and capabilities, we are creating a new global leader in HIV and reaffirming our ongoing commitment to the treatment of the disease. With the strength of the companies' current HIV products, as well as the complementary fit of Pfizer's HIV pipeline and GSK's global distribution capabilities, the new company is well positioned to bring new and improved medicines to patients with more speed and efficiency. The new company can reach more patients and accomplish much more for the treatment of HIV globally than either company on its own."

Focused new business with industry-leading HIV pipeline
The new company will have
a broad product portfolio of 11 marketed products including market-leading therapies such as Combivir, Kivexa and Selzentry/Celsentri. Based on 2008 pro-forma results, this combined portfolio generated sales of approximately £1.6 billion and these revenues will provide the new company with financial stability and support investment in its pipeline.

The clear focus of the new business will be to invest in research and development of innovative HIV treatments and formulations that improve adherence and overcome resistance to the virus.

The company will have an industry-leading pipeline of 6 innovative and targeted medicines, including 4 compounds in phase II development. Altogether, the new company will have 17 molecules at its disposal to develop in fixed-dose combinations as possible new HIV treatments. The new company will contract R&D services directly from GSK and Pfizer to develop these medicines.

The new company will also invest in early-stage research and discovery of HIV medicines, and will benefit from a new Research Alliance Agreement with GSK and Pfizer. Under this new alliance, GSK and Pfizer will continue to conduct discovery research and development into HIV medicines and the new company will invest in this activity and will have exclusive rights of first negotiation in relation to any new HIV-related medicine developed by either GSK or Pfizer.

New company's product portfolio and pipeline

Combined Marketed Product Portfolio Combined Clinical Development Pipeline
Product Class Product Class Phase
Agenerase Protease inhibitor GSK 1349572 Integrase inhibitor II
Combivir NRTI UK-453061 NNRTI II
Epivir/3TC NRTI GSK 2248761 (IDX899) NNRTI II
Epzicom/Kivexa NRTI PF-232798 CCR5 antagonist II
Lexiva/Telzir Protease inhibitor PF-3716539 PK enhancer I
Rescriptor NNRTI (US only) GSK706769 CCR5 antagonist I
Retrovir/AZT NRTI @ @ @
Selzentry/Celsentri CCR5 antagonist @ @ @
Trizivir NRTI @ @ @
Viracept Protease inhibitor (N.America only) @ @ @
Ziagen NRTI @ @ @

Initiatives to improve treatment access
The new company will continue GSK's and Pfizer's commitments to improve access to HIV medicines for everyone.

Not-for-profit pricing for HIV medicines will continue for those countries most in need, and the new company will continue to facilitate new voluntary licences to diversify production and expand capacity in these markets.

The new company will also conduct research and development activities specifically to address appropriate access to HIV medicines in developing countries. In particular, the new company will increase its research effort into treatments and formulations for children living with HIV. 

The new company will continue GSK and Pfizer's strong record of community support for HIV. GSK's long-standing Positive Action programme will transfer to the new company, maintaining a focus on prevention, tackling stigma and discrimination, and building capacity and treatment literacy within the global community. Since 2002, GSK has conducted 65 partnership projects across 63 countries and the new company will continue to invest in Positive Action.

Pfizer has made substantial investments in the fight against HIV/AIDS, as evidenced through its partnerships with key stakeholders and organisations. The Pfizer Foundation remains committed to its continued support of ConnectHIV in the USA, the Diflucan Partnership Program in developing countries and the Infectious Diseases Institute, a global centre of excellence for teaching, research and healthcare delivery in Africa.

Independent leadership dedicated to HIV treatment

The management of the new company will bring a new focus to the global HIV therapy area and will be able to rapidly prioritise and access internal and external investment opportunities.

Dominique Limet has been appointed as Chief Executive Officer Designate of the new company and as a member of its Board.

Dominique is currently Senior Vice President and Head of GSK's Personalised Medicine Strategy. He is a trained physician and has held a number of senior leadership roles at GSK including as regional President for Southern and Eastern European markets and as General Manager of GSK France. Dominique has served as a member of GSK's Positive Action Steering Committee and was a board member of the GSK France Foundation which supported a range of HIV/AIDS-related programmes around the world.

Other Board members to be appointed to the new company are:

GSK and Pfizer have established an integration steering committee, with representatives from both companies to prepare for the operation of the new company upon the closing of the transaction. A head of R&D will be appointed to oversee all research and development activities. Manufacturing and other services will be provided by GSK and Pfizer.

Financial details
The combination is highly complementary and serves both companies strategically. For GSK, the transaction will expand its marketed portfolio, helping to reduce the impact of patent expiries to several of its HIV products in future years, and it will provide access to a broad range of new pipeline assets. For Pfizer, the collaboration will provide Selzentry/Celsentri and its pipeline assets with access to GSK's global HIV commercial organisation and HIV distribution network to better reach patients in need.

Equity interests
Upon completion of the transaction, GSK will hold an 85% equity interest in the new company and Pfizer will hold 15% reflecting the value of their currently marketed products. To reflect the potential future performance of their respective HIV pipeline products, GSK and Pfizer have agreed a structure for their equity interests to be adjusted in the event that specified sales and regulatory milestones are achieved.

If all milestones were to be achieved, GSK's equity interest in the new company would be 75.5% and Pfizer's would be 24.5%.  In the event that the only milestones achieved are in respect of the pipeline assets originally contributed by GSK, GSK's equity interest in the new company would be 91% and Pfizer's would be 9%.  In the event that the only milestones achieved are in respect of the products and pipeline assets originally contributed by Pfizer, GSK's equity interest in the new company would be 69.5% and Pfizer's would be 30.5%.

The dividend entitlements of GSK and Pfizer in respect of their respective equity interests also include provision for preferential dividend payments if specified sales thresholds are met in respect of the marketed products and pipeline assets that they each originally contributed to the new company. 

The new company will be fully consolidated in GSK's financial statements and Pfizer's share of the new company will be reflected as a minority interest. As part of the transaction GSK and Pfizer will exchange assets, and as a result GSK will be required to add Pfizer's marketed and pipeline assets into its accounts at fair value. Consequently, under accounting rules which apply to acquisitions completed prior to the end of 2009, this asset exchange will result in a one-off non-cash, pre-tax accounting gain for GSK on the closure of the transaction, which is expected during the fourth quarter of 2009. GSK will report this gain within other operating income.

Earnings and cashflows
Reflecting GSK's greater contribution of marketed products to the new company, and the pipeline investment required, the transaction is expected to result in marginal near-term earnings per share dilution for GSK of approximately 1 to 2% in 2010 and 1% in 2011. This dilution is expected to reverse as the new company's pipeline starts to generate sales. The transaction is expected to be neutral to Pfizer's earnings in 2009 and slightly accretive in 2010 and 2011.

The estimated dilution for GSK includes charges for amortisation of intangible assets related to Pfizer's current and future marketed products, includes the realisation of annual pre-tax cost savings of up to £60 million by 2011 and excludes the one-off non-cash, pre-tax accounting gain referenced above. Synergies will be delivered through elimination of overlapping commercial infrastructure.

The transaction will have a small adverse impact on GSK's reported cashflow in 2010-2011 as a result of minority dividends paid, and is expected to be cashflow accretive by 2012.

The book value of the gross assets contributed to this transaction by GSK and Pfizer is approximately £250 million. Based on 2008 pro-forma results, sales of the combined portfolio were approximately £1.6 billion with operating profits of approximately £870 million.

Conditions to transaction closing
The closing of the transaction and commencement of the new company's business is conditional upon certain matters including receiving certain regulatory and tax clearances, and no material adverse change occurring in respect of either GSK's or Pfizer's HIV business prior to closing. The transaction is expected to close in the fourth quarter of 2009. The companies will also conduct consultations with staff, works councils, trade unions and other employee representatives as appropriate and in accordance with applicable employment legislation.

GlaxoSmithKline - one of the world's leading research-based pharmaceutical and healthcare companies ? is committed to improving the quality of human life by enabling people to do more, feel better and live longer.  For further information please visit www.gsk.com

Pfizer- Founded in 1849, Pfizer is the world's largest research-based pharmaceutical company taking new approaches to better health. We discover, develop, manufacture and deliver quality, safe and effective prescription medicines to treat and help prevent disease for both people and animals. We also partner with health care providers, governments and local communities around the world to expand access to our medicines and to provide better quality health care and health system support. At Pfizer, more than 80,000 colleagues in more than 90 countries work every day to help people stay happier and healthier longer and to reduce the human and economic burden of disease worldwide.

April 20, 2009@

GlaxoSmithKline and Stiefel to create new world-leading specialist dermatology business @畆
Stiefel, the worldfs largest independent dermatology company, acquired by GSK in deal valued at up to $3.6 billion
@New global business will have combined revenues of approximately $1.5 billion and robust new product pipeline
@Significant step forward to grow and diversify GSKfs business, providing immediate new revenue and synergy opportunities

GlaxoSmithKline plc (GSK) and Stiefel Laboratories Inc. today announced that they have signed an agreement to create a new world-leading specialist dermatology business. Under the terms of the agreement GSK will acquire the total share capital of Stiefel for a cash consideration of $2.9 billion. GSK also expects to assume $0.4 billion of net debt upon closing. A potential further $0.3 billion cash payment is contingent on future performance. GSK
fs existing prescription dermatological products will be combined with Stiefelfs and the new specialist global business will operate under the Stiefel identity within the GSK Group.

Andrew Witty, Chief Executive Officer of GSK said,
gAs part of our strategy to grow and diversify GSKfs business, we are continuing to make new investments through targeted acquisitions. This transaction will create a new world-leading, specialist dermatology business and re-energise our existing dermatology products. The addition of Stiefelfs broad portfolio will provide immediate new revenue flows to GSK with significant opportunities to enhance growth through leveraging our existing global commercial infrastructure and manufacturing capability. We look forward to working with Stiefel to develop this exciting opportunity.h

Charles W. Stiefel, Chairman and Chief Executive Officer of Stiefel, said, gThe combination of Stiefel and GSK will create a leading company in global dermatology with a strong presence in the prescription, consumer and aesthetic skin health markets. Along with adding hundreds of marketed dermatology products, this deal will increase the value of Stiefelfs unparalleled dermatology pipeline by expanding the customer base to which we will be able to offer these products. It also gives GSK access to one of Stiefelfs greatest assets - its valued relationships and shared understanding with dermatologists around the world.h

New world-leading specialist dermatology business
The new business will have a broad portfolio of dermatology products including Stiefel
fs leading brands: Duac, for acne, Olux E for dermatitis and Soriatane for the treatment of severe psoriasis. GSKfs key dermatology brands include: Bactroban, Cutivate and recently launched Altabax.

Combined pro forma revenues for the calendar year ended 2008 were approximately $1.5 billion, representing an 8% share of the global prescription dermatology market. Sales of Stiefel
fs products for the calendar year ended 2008 were approximately $900 million. Sales of GSKfs prescription dermatology products were approximately $550 million.

The new business will have a robust development pipeline, with Stiefel currently having more than 15 projects in late-stage development across a wide variety of dermatological conditions, such as acne, dermatoses and fungal infection. The new business also has access to significant innovative and proprietary formulation technologies.

Charles Stiefel will continue in the role of CEO and Chairman of the Board of Stiefel until closure of the transaction and he will lead the new business thereafter.

Financial details
The formation of the new business will provide significant opportunities for both sales and cost synergies. Stiefel
fs products will benefit from GSKfs global distribution and commercial organisations, particularly in markets such as Brazil, Russia, India, China and Japan. GSKfs products will benefit from Stiefelfs specialty sales force, relationships and experienced management in dermatology.

Cost synergies for the new business are expected primarily from combining manufacturing and administrative functions. The companies expect to deliver annual pre-tax cost savings of up to $240 million by 2012 with integration costs of approximately $325 million over the next 3 years. These integration costs will be reported within the middle column of GSK
fs income statement together with other ongoing major restructuring costs. Excluding integration costs, the transaction is expected to result in minor earnings per share (EPS) dilution for GSK in 2009 (less than 1%) and to be 1-2% accretive to EPS in 2010.

The transaction has been approved by the Stiefel stockholders. Closing of the transaction is conditional upon certain matters including receiving certain regulatory clearances and no material adverse change occurring in respect of Stiefel's business prior to closing. The transaction is expected to close in the third quarter of 2009.

GlaxoSmithKline ? one of the world
fs leading research-based pharmaceutical and healthcare companies ? is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For further information please visit www.gsk.com

Stiefel Laboratories, Inc. is enthusiastically committed to advancing dermatology and skin science around the world. The company
fs deeply-rooted dedication and drive for innovation along with its sole focus on dermatology has led Stiefel to become the largest independent dermatology company in the world. In addition to more than 30 wholly-owned subsidiaries, six manufacturing plants and a global research and development network, Stiefelfs most valuable asset is its global network of nearly 3,500 driven associates.

By combining expertise, knowledge and imagination, Stiefel delivers exceptional ethical, over-the-counter and aesthetic products to its customers in more than 100 countries around the world, ultimately providing a unique Stiefel skin health experience. Stiefel is also committed to improving today
fs treatments and exploring tomorrowfs innovations. Each year, the company invests more than $100 million in developing the most advanced skin health solutions. To learn more about Stiefel, visit www.stiefel.com.