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Biotech / Medical : Pharma News Only (pfe,mrk,wla, sgp, ahp, bmy, lly) -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (1404)	2/4/1999 8:53:00 AM
From: Anthony Wong	Read Replies (2) \| Respond to of 1722

SmithKline Sale of Pharmacy Unit Plausible, Analysts Say Bloomberg News February 4, 1999, 6:17 a.m. ET SmithKline Sale of Pharmacy Unit Plausible, Analysts Say London, Feb. 4 (Bloomberg) -- SmithKline Beecham Plc, Britain's second-biggest drugmaker, declined comment on a press report that it is in talks to sell a U.S. drug-distribution unit, a move analysts said would be plausible. The Wall Street Journal reported that SmithKline is seeking to sell its Diversified Pharmaceutical Services Inc. unit for less than the $2.3 billion it paid for it in 1994. The unit is one of the U.S.'s largest so-called pharmacy benefits managers, which buy drugs wholesale from pharmaceutical companies and sell them to patients and health-care companies on a pre-paid basis. The DPS purchase came amid similar moves by drugmakers such as Merck & Co. and Eli Lilly & Co., all of which were seeking direct access to patients at a time when health maintenance organizations were limiting patients' drug choices. The value of such businesses dropped when U.S. antitrust regulators prevented drugmakers from favoring their drugs over rivals' products. Lilly last year sold its business to Rite Aid Corp., a drug-store chain, for $1.5 billion, having bought it for $4.1 billion. ''Given that Lilly sold their PBM, that has to indicate that it wasn't adding the value that Lilly had hoped,'' said Nigel Barnes, an analyst with Merrill Lynch & Co. ''I guess the rationale for SmithKline would be the same.'' SmithKline shares gained as much as 33 pence, or 4.1 percent, to 837.5p. --Dane Hamilton in the London newsroom (44-171) 330-7727/ab