When we hear of pharmaceutical companies' ventures it's usually either a straight merger & acquisition or a collaboration on a drug or two in their pipelines to share costs and, of course, potential profits. But Pfizer Inc. (PFE) and GlaxoSmithKline (GSK) have come up with a new one.

Rather than merge (recall, Pfizer is acquiring Wyeth for $68 billion), or collaborate on a drug or two, the two have decided to merge their HIV operations. They plan to develop a company focused solely on research, development and commercialization of HIV medicines.

Glaxo is currently one of the biggest sellers of HIV treatments, but its drugs are older, with some coming off patent as soon as 2012. With its sales falling and its pipeline weak, it makes sense to combine operations with Pfizer, which has a more robust HIV pipeline. Together, they claim, they will have 19 percent market share.

Glaxo will initially hold an 85 percent equity interest in the new company, leaving Pfizer with the other 15 percent, but this could change depending on milestones achieved. The new company will have 11 marketed products, including Combivir, Kivexa and Pfizer's Selzentry/Celsentri, which together generated sales in 2008 of £1.6 billion ($2.4 billion). The venture will also have a pipeline of 6 medicines, including four in phase II development. The new company could be worth $7.5 billion, according to the Wall Street Journal.

During these hard times, drug companies are not only facing a recession and the need to control costs better, but many of the Big Pharma blockbuster revenue producing drugs are coming off patent. Andrew Witty, Glaxo's CEO, has often said he is not interested in mega-mergers, but rather these kinds of deals that can "create value and generate efficiency."

Could this indeed be a sign of new deals to come? Instead of large M&As to create mega-companies, could we see the joining of forces to actually create smaller, specialized ones? In terms of deal making, this is indeed an innovation, but it remains to be seen how well it will do.

The HIV drug business is a tough area of drug development and both companies faced pressure in the segment. There are only a few dozen good treatments available, and coming up with something better has often proved difficult. Pfizer and Glaxo's collaboration is indeed an attempt to breathe life into a challenging product segment. The new company will have the resources from their combined revenue for dedicated research, so that it could maybe lead to the development of more medicines, more efficiently, which could lead to more people living with HIV/AIDS.

Gilead Sciences (GILD), which now dominates the HIV drug market, along with Bristol Myers Squibb (BMY) have hurt Glaxo's sales. But if the new company will be as innovative and creative in its drug development as it has been in its business model, perhaps it could present a welcome challenge to current rivals, because that's what's really important at the end of the day -- the development of new effective drugs.

According to the UNAID, an estimated 33 million people were living with HIV in 2008, of whom about four million were taking HIV/AIDS medications. In 2008, the market for HIV medications was worth about $12.3 billion and it is growing as people live longer. There is no cure for the human immunodeficiency virus (HIV) that causes AIDS, but combinations of drugs can keep the virus from replicating and damaging the immune system.

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