GSK Seeks to Increase Emerging Markets Presence with New Vaccine JV

GlaxoSmithKline (NYSE: GSK) has formed a vaccine JV with Shenzhen Neptunus Interlong Bio-Technique Co. Ltd. (NIBT), an established China vaccine company. The JV will produce flu vaccines for the China market. It will seek to increase GSK’s presence in emerging markets, which is one of the company’s long-term strategic goals. Also, the JV benefits GSK by using its vaccine adjuvant.

Initially, GSK will own a 40% stake in the JV in exchange for an investment of $34 million, which will be made in a combination of cash and assets. GSK has the right to make additional investments over the next two years that will give it majority control. Shenzhen Neptunus will contribute $47 million of assets for its share. The structure of the JV follows the general outline originally announced in November 2008.

The JV will produce influenza vaccines for China, Hong Kong and Macau, including vaccines for seasonal, pre-pandemic and pandemic influenza. While GSK contributes its adjuvant and efficient production techniques, Shenzhen Neptunus provides local manufacturing capacity and R&D expertise.

According to an analysis by British firm WestLB, GSK’s vaccine business will total $5 billion in 2009, a 23% increase over last year. If GSK can land an order to supply pandemic flu vaccine to Europe, it could book revenues as high as $6 billion.

GSK Biologicals, the company’s vaccine divisions, will be in charge of the JV. GSK Biologicals has facilities, alliances or JVs in 14 sites around the globe.

Disclosure: none.