The UK regulatory review of Alexion Pharmaceuticals acquisition by AstraZeneca limits the ability of GlaxoSmithKline (GSK) to buy its way out of a proxy brawl with activist investor Elliott, says GlobalData, a leading data and analytics company.

Despite the acquisition passing the regulatory review from the US Federal Trade Commission (FTC), the UK Competition and Markets Authority (CMA) is now investigating it.

GSK, the other major UK headquartered pharmaceutical company, is heading towards a proxy fight with the activist Investor fund Elliot. Elliot has acquired a significant stake in GSK, while concerns about GSK’s performance and the performance of chief executive, Emma Walmsley, have been growing.

Peter Shapiro, Senior Director of Drugs and Business Fundamentals at GlobalData, comments: “Elliot will push to restructure the makeup of GSK’s drug pipeline. The easiest way to restructure the clinical stage pipeline of a company is by the acquisition of smaller more innovative Bio/Pharma companies, which is what AstraZeneca is doing with Alexion.

“Alexion has a strong pipeline of orphan and rare disease drugs that will diversify AstraZeneca’s drug pipeline. If the UK CMA resists approving this acquisition, it could make it harder for GSK to acquire smaller more innovative Bio/Pharma companies as well. This is not the only problem for acquisitions, because of the high trading value of Bio/Pharma stocks currently, companies will have to pay a premium for acquisitions.

“Interestingly, Elliot is now involved with both large British pharmaceutical companies. In 2019, Alexion management came under pressure from shareholder Elliott to be acquired, which ultimately lead to the acquisition by AstraZeneca.”