In its bid to squeeze the most out of the assets following the merger, GlaxoSmithKline is planning to sell Affymax, the California-based drug discovery company that produces libraries of millions of potential drugs to test in screens. Affymax employs around 200 people in two laboratories in Santa Clara and Palo Alto in California.
The company, which was bought by Glaxo Holdings in 1995 for $533 million, is expected to net around $400 million to the pharma major. Along with this acquisition, Glaxo also acquired a 65 per cent stake in Affymetrix, a successful gene chip company that was earlier spun off from Affymax. Glaxo has already reaped a lot returns from this company as it subsequently sold of several chunks of shares that yielded the company a handsome gain. GlaxoSmithKline still holds about 22 per cent in Affymetrix.
With Glaxo having installed Affymax technology across its laboratories around the world, the latter has ceased to be a key asset in the pharma company's portfolio. Hence the divestment.
According to some venture capital groups valuing the company, which has been part of Glaxo for more than six years and has been providing services exclusively to Glaxo, is going to be difficult. As a stand-alone entity, it would have to differentiate its services from those of other chemical library companies in a sector that has rapidly become commoditised.