SmithKline Beecham Plc.

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SmithKline Beecham Plc.

New Horizons Court
Brentford, Middlesex TW8 9EP
United Kingdom
Telephone: (0181) 975-2000
Fax: (0181) 975-2090
Web site: http://www.sb.com

Public Company
Incorporated: 1989
Employees: 58,300
Sales: £8.08 billion (US$13.42 billion) (1998)
Stock Exchanges: London New York
Ticker Symbol: SBH
NAIC: 325412 Pharmaceutical Preparation Manufacturing; 325611 Soap and Other Detergent Manufacturing; 325620 Toilet Preparation Manufacturing; 312111 Soft Drink Manufacturing; 541710 Research and Development in the Physical, Engineering, and Life Sciences

SmithKline Beecham plc, which was formed in 1989 from the merger of the Beecham Group of the United Kingdom and the U.S. company SmithKline Beckman, is one of the world’s largest pharmaceutical companies, and one of the top two in Britain (the other being Glaxo Wellcome pic). SmithKline discovers, develops, manufactures, and markets prescription drugs, vaccines, over-the-counter (OTC) medicines, and health-related consumer products. Among the company’s more than 400 branded products are Augmentin, a leading antibiotic; Relifex/Relafen, an anti-inflammatory used to treat arthritis; Seroxat/Paxil, a leading antidepressant; Havrix/Engerix-B/Twinrix hepatitis vaccines; LYMErix, the first vaccine for the prevention of Lyme disease; Panadol, an OTC analgesic; several consumer products to deal with stomach and digestive ailments, including Turns, Tagamet HB, and Phillips Milk of Magnesia; Horlicks, Lucozade, and Ribena nutritional drinks; Aquafresh toothpaste and toothbrushes; OTC cold and flu medications, including Beechams, Contac, and Sucrets; and smoking cessation aids, including Nicorette and NicoDerm CQ.

Beecham’s Modest Beginnings

One of the first British companies to undertake intensive advertising, Beecham grew from a small regional pill-peddling operation to a multinational patent medicine company at a time when very few companies branched beyond their own communities. In 1847 Thomas Beecham began hawking his own brand of pills throughout the town of Wigan and the surrounding countryside. He soon set up shop as an herbalist and grocer in Wigan. Beecham, born the son of a farm worker in 1820, had spent his youth as a shepherd boy, and in that job he had learned a good deal about herbal remedies. Beecham was said to have had a special knack for healing sick animals and, on occasion, even humans. For several years Beecham sold his laxatives at local markets with a sales pitch that included showing off a jar of intestinal worms.

In 1859, after mixed results in Wigan, Beecham moved his operation to nearby St. Helens, where he focused on two products: a cough tablet and the famous laxative Beecham’s Pills, advertised in the local newspaper as “worth a guinea a box.” Both products were available through mail order and Beecham increased spending on advertising to take advantage of a rapidly growing demand for health products.

In 1881, when Thomas Beecham’s son Joseph took effective control of the company, Beecham’s sales were at £34,000, demonstrating average annual growth of about 18 percent, a rate it had sustained since 1865. The elder Beecham remained active in the operations of the company until his official retirement in 1895.

Joseph Beecham increased the company’s advertising expenditures considerably. By 1891 annual advertising expenditures had increased to £120,000, from £22,000 in 1884, and Beecham introduced more creative ads. Advertising gimmicks included free distribution of sails printed with Beecham slogans to boat owners and inexpensive general information booklets bearing Beecham’s messages.

During the 1880s Joseph Beecham spearheaded the company’s expansion overseas. First, Beecham’s Pills were exported to countries throughout the British Empire. In 1888 they were distributed in the United States and Canada, and two years later a manufacturing facility was set up in New York.

Extensive advertising had made Beecham’s Pills practically a household word on several continents by the end of the 19th century. This success was not at first duplicated after the turn of the century, however. Although Beecham remained profitable, its rate of growth slowed considerably. Joseph Beecham spent more of his time on projects unrelated to the business, including numerous philanthropic endeavors and patronage of his music-minded son, Thomas, later to become a renowned conductor. In 1913 sales remained static at £290,000, although the firm’s profitability had improved.

In 1916 Joseph Beecham died, leaving a complicated estate. Beecham had never incorporated the pill business and it remained entwined with his other affairs. Henry Beecham, Joseph’s younger son, ran the business with three other executors until 1921, but had no active role after that time. Three years later the pill business was acquired by financier Philip Hill. Hill incorporated the company as Beecham’s Pills in 1928 and launched a new period of growth.

Expanding and Diversifying into Pharmaceuticals: 1930s–70s

For the next ten years Hill made acquisitions broadening the product line of the company. He purchased patent medicines such as Yeast Vite, Iron Jelloids, Phosferine, and Phyllosan. In the later 1930s the company entered the toiletries business with the acquisition of Prichard and Constance, a shampoo manufacturer that distributed the brand name Amami. In 1938 Beecham acquired Macleans Ltd., well-known for toothpaste; County Perfumery, manufacturers of Brylcreem; and Eno Proprietaries, makers of a popular antacid. In 1938 Beecham acquired Lucozade, a popular glucose drink, from its inventor W.W. Hunter, to enter the health-drink field. The company changed its name to Beecham Group Ltd. in 1945 to reflect its diversified nature.

When Beecham acquired Maclean’s in 1938 it unknowingly changed its direction. With the purchase came company secretary and director H.G. Leslie Lazell. Lazell became corporate secretary of Beecham’s Pills, and during the war took over as managing director of the Maclean’s unit. Leslie Lazell had always been a firm believer in research, and he developed a research department at the company, which soon entered the medicines field.

Formed in 1943, Beecham Research Laboratories Ltd. employed 115 people, 34 of them graduate-level scientists. In 1947 a 27-acre facility was opened at Surrey, with Alexander Fleming, the discoverer of penicillin, presiding over the opening ceremonies. Beecham Research Laboratories started out researching both pharmaceuticals and food products but before long concentrated solely on pharmaceutical research. In 1949 Beecham’s acquisition of the C.L. Bencard company, a manufacturer of allergy vaccines, paved the way for entry into the prescription drug field.

During the 1950s Beecham expanded its consumer products line and pumped the profits into drug research. It purchased new health drinks, including Ribena blackcurrant juice, Shloer apple and grape drinks, and Horlicks beverages were acquired in 1969. The toiletries division also expanded, adding Vosene shampoo among others. A real breakthrough came in 1957 when company researchers isolated the penicillin nucleus 6-aminopenicillanic acid (6-APA). This discovery opened the door to the manufacture of a multitude of new antibiotics.

In 1959 Beecham marketed Broxil (phenethicillin), followed shortly by Celbenin (methicillin). The introduction of these products represented a medical breakthrough, as many bacterial strains had built up a resistance to the original penicillins-Penicillin G and Penicillin V. In 1961 Penbritin (ampicillin) hit the market, and soon Beecham’s facilities were inadequate for the worldwide demand. A 35-acre complex at Worthing came on line in the early 1960s to produce 6-APA, the base for semisynthetic penicillins. Beecham’s lead in antibiotics brought tremendous growth in the 1960s and 1970s.

Lazell’s emphasis on marketing was also key to Beecham’s growth. By 1960 the company was the second largest advertiser in the United Kingdom. Beecham was one of the first British firms to put the CEO directly in charge of the marketing team, long a standard practice in the United States.

In the mid-1960s, Beecham products penetrated the European continent. Within 20 years, this region comprised Beecham’s largest single market. In the later 1960s Beecham Pharmaceutical marketers turned their attention to the United States, where an expanding business had been built on foundations provided by Brylcreem hair dressing. In 1967 the company opened an antibiotics factory in Piscataway, New Jersey. In 1971 Beecham bought the U.S. feminine hygiene company S.E. Massengill.

In 1972 the company planned to increase the size of its prescription drug business by merging with one of its chief British competitors, the Glaxo Group. The British government blocked the merger, citing the possibility of reduced spending on research and development within the industry. Glaxo was particularly attractive because it had a large network overseas.

Company Perspectives:

At SmithKline Beecham, healthcare—prevention, diagnosis, treatment and cure—is our purpose. Through scientific excellence and commercial expertise we provide products and services throughout the world that promote health and well-being.

The source of our competitive advantage is the energy and ideas of our people. Our strength lies in what we value: customers, innovation, integrity, people and performance.

At SmithKline Beecham, we are people with purpose, working together to make the lives of people everywhere healthier, striving in everything we do to become The “Simply Better” Healthcare Company as judged by all those we serve: customers, shareholders, employees and the global community.

Also in 1972 Beecham launched Amoxil, which went on to become one of the most widely prescribed antibiotics, often used to treat bacterial infections, including those involving the ear and throat. Amoxil was the brand name for amoxycillin, which had been discovered by Beecham scientists. The company’s growing antibiotic line also included Floxapen (flucloxacillin) and Ticar (ticarcillin). In the mid-1970s new non-antibiotic drugs were introduced, such as the allergy vaccine Pollinex and the antidepressant Norval.

Late 1970s to Late 1980s: Acquisitions Followed by Divestments

Acquisitions of U.S. drug and consumer products companies accelerated toward the end of the decade and into the 1980s. In 1977 Beecham bought Sucrets throat lozenges for US$76 million and acquired the floundering Calgon bath products line. Beecham turned the businesses around, revamping old products and packaging, and using aggressive marketing strategies. In 1979 Beecham purchased Jovan, the U.S. perfume manufacturer, for US$85 million. Other fragrance lines were later acquired, including Diane Von Furstenberg in 1983 and the cosmetics and fragrances of BAT Industries pic in 1985. Other big acquisitions in the early 1980s included the J.B. Williams company, makers of Geritol, Sominex, Aqua Velva, and Lectric Shave among others for US$100 million in 1982; DAP, Inc., manufacturer of caulk and other home improvement products for US$68 million in 1983; and Norcliff Thayer, a major manufacturer of OTC drugs including the well-known antacid Turns, in the United States for US$369 million in 1985. Beecham also acquired a number of European pharmaceutical companies in France, West Germany, and Italy. On the drug development front, Beecham in 1981 introduced Augmentin, an antibiotic used to treat an array of bacterial infections.

Key Dates:

1830:: John K. Smith opens his first drugstore in Philadelphia through a company called John K. Smith & Company.
1847:: Thomas Beecham begins hawking his own brand of pills in and around the town of Wigan.
1875:: Smith’s company is renamed Smith, Kline & Company, ten years after Mahlon Kline joined the company, first serving as bookkeeper then moving into management.
1881:: Joseph Beecham takes effective control of his father’s company.
1891:: Smith, Kline acquires French, Richards & Company and changes its name to Smith, Kline & French (SK&F).
1916:: Joseph Beecham dies.
1924:: Financier Philip Hill acquires the Beecham business.
1928:: Hill incorporates Beecham’s Pills and launches a new period of growth.
1945:: Beecham’s Pills changes its name to Beecham Group Ltd. to reflect its diversification.
1952:: SK&F launches Dexedrine, the first time-released capsule.
1957:: Beecham researchers isolate the penicillin nucleus 6-APA, a discovery that opens the door to the manufacture of a multitude of new antibiotics.
1960:: SK&F begins marketing Contac, the first all-day cold remedy.
1972:: Beecham launches Amoxil, which becomes one of the most widely prescribed antibiotics.
1976:: SmithKline Corporation (new name for SK&F) revolutionizes peptic ulcer treatment through the introduction of Tagamet.
1981:: Beecham introduces Augmentin, an antibiotic used to treat an array of bacterial infections.
1982:: SmithKline acquires Allergan, a maker of eye and skin care products, and Beckman Instruments, a leading manufacturer of diagnostic and measurement instruments and supplies; it also changes its name to SmithKline Beckman Corporation.
1985:: Norcliff Thayer, a U.S. maker of OTC drugs including Turns, is acquired by Beecham; SmithKline Clinical Labs merges with American BioScience Laboratories to form SmithKline BioScience Laboratories.
1986:: Robert P. Bauman becomes chairman of Beecham and disposes of £400 million of noncore, consumer product businesses.
1988:: SmithKline BioScience Labs becomes the industry leader with the purchase of one of its biggest com-. petitors, International Clinical Laboratories, Inc.
1989:: Tagamet becomes the world’s first drug to have annual sales in excess of US$1 billion; SmithKline’s James Black is awarded the Nobel prize in medicine for his Tagamet research; Beecham and SmithKline merge to form SmithKline Beecham plc.
1993:: Company spends US$125 million to enter into a genetic research collaboration agreement with Human Genome Sciences Inc.
1994:: Company acquires Diversified Pharmaceutical Services, Inc., a leading U.S. pharmaceutical benefit manager; it also acquires Sterling Health, a specialist in OTC medicines, from Eastman Kodak, then sells Sterling’s North American operations to Bayer AG; the company sells its animal health business to Pfizer Inc.
1998:: Company enters advanced mergers talks with Glaxo Wellcome, but the deal falls through.
1999:: Diversified Pharmaceutical Services and the company’s clinical laboratory unit are divested.

In 1984, Beecham’s profits began to level off, due in part to decreased popularity of ampicillin, caused by increased antibiotic competition, and pressure from the British government to cap profits on drugs. Following Lazell’s formula, Beecham’s new chairman, Sir Ronald Halstead, hoped to pay for rising research and development costs through profits on consumer goods. A number of acquisitions of consumer products companies in 1984 and 1985 seemed to the company’s directors too costly and out of line with Beecham’s overall thrust. Halstead was let go in 1985. In 1986 Robert P. Bauman became chairman of Beecham. The company’s first U.S. chairman, Bauman knew the North American market well, having worked at General Foods, Avco, and Textron. Bauman sold off some of Beecham’s consumer products lines, primarily soft drinks lines, although he retained the successful Ribena, Horlicks, and Lucozade brands, and implemented cost-cutting measures worldwide. Between 1986 and mid-1989, Bauman disposed of £400 million of noncore businesses.

By the mid-1980s Beecham had made significant headway into the U.S. marketplace and continued to hold its place as the largest OTC drug producer in its home market. Beecham’s pharmaceutical research focused on three general areas: cardiovascular therapy, diseases affecting the central nervous system, and anti-infectives. Demand for healthcare products increased substantially as the wealthy U.S. market grew older. Relifex, a nonsteroidal anti-inflammatory used by arthritis patients, began limited marketing in 1985 and by the late 1980s showed promise for the company. An anticlotting agent, Eminase, introduced in Europe in 1987, also appeared to be a significant breakthrough for cardiac patients. Two new antibiotics, Augmentin and Timentin, earned the Queen’s Award for technological achievement in 1986. Both drugs received widespread acceptance throughout the medical community.

Brief History of SmithKline Beckman

In July 1989 Beecham merged with an equally well established business, Philadelphia-based SmithKline Beckman Corporation. SmithKline Beckman’s roots extended back to 1830, when John K. Smith opened his first drugstore in Philadelphia through a company called John K. Smith & Company. The firm soon became a leader in drug wholesaling. It was renamed Smith, Kline & Company in 1875, ten years after Mahlon Kline joined the company, first serving as bookkeeper, then moving into sales and management. In 1891 Smith, Kline acquired French, Richards & Company and changed its name to Smith, Kline & French (SK&F). At this time, SK&F produced and sold fine perfumes, liniments, tonics, hair oil, cough medicine, and various home remedies.

In 1910 SK&F expanded its product offerings through the addition of the “Blue Line,” which included such standard drugs as poison ivy lotion, iron tablets, and lozenges. Around the same time as the establishment of Beecham Research Laboratories, SK&F established its own research arm called Smith Kline & French Laboratories. In the 1950s SK&F scientists developed the antipsychotic Thorazine, which started a revolution in the treatment of mental illness. In 1952 came the launch of Dexedrine, the first time-released capsule. This was followed in 1960 by another time-release product, Contac, the first all-day cold remedy.

During the 1970s SK&F shortened its name to SmithKline Corporation. The revolutionary peptic ulcer medication Tagamet was introduced in the United Kingdom in November 1976 and in the United States in August 1977. Tagamet went on to become, in 1989, the first drug in the world to have annual sales in excess of US$1 billion. Also in 1989 SmithKline’s James Black was awarded the Nobel prize in medicine for his research involving Tagamet and other beta-blockers and H₂ blockers. In 1982 SmithKline acquired Allergan, a maker of eye and skin care products, and Beckman Instruments, a leading manufacturer of diagnostic and measurement instruments and supplies. On completion of the latter purchase, the company changed its name to SmithKline Beckman Corporation. By this time, SmithKline had also diversified into the clinical laboratories business. It entered that sector in the 1960s through the acquisition of seven labs in the United States and one in Canada. SmithKline Clinical Labs then merged with American Bio-Science Laboratories in 1985 to form SmithKline BioScience Laboratories, which became the industry leader in 1988 with the purchase of one of its biggest competitors, International Clinical Laboratories, Inc.

Merger of Beecham and SmithKline in 1989

The merger of Beecham and SmithKline Beckman formed what was at the time one of the top five pharmaceutical companies in the world. The new SmithKline Beecham plc, based in London, tallied US$6.9 billion in sales annually. Beecham was widely considered the healthier half of the new company. With Eminase and Relifex about to hit the U.S. market, Beecham looked solid enough to shore up its ailing U.S. partner for at least a short time. SmithKline had failed to come up with a blockbuster product since it introduced the ulcer remedy Tagamet in the mid-1970s, despite substantial research and development expenditures. New competition from Glaxo’s Zantac had eroded some of Tagamet’s expected market share, and SmithKline was accused by stock analysts of lacking direction. A headline in the Wall Street Journal, July 7, 1989, called the merger “just what the doctor ordered” for SmithKline.

SmithKline’s chairman Henry Wendt became chairman of the merged company while Robert Bauman, who became the new company CEO, faced combining two distinct corporate cultures and had little time to spare: just one week after the Beecham SmithKline merger was finalized, two U.S. giants, Squibb and Bristol-Myers, announced their own merger plans (forming Bristol-Myers Squibb Company). Beecham, with its new prescription drugs and strong presence in the over-the-counter drug market, looked like a good partner for SmithKline, with its strong U.S. sales staff. The SmithKline Beecham merger permitted both companies to compete on a global level neither could manage alone. In addition, the companies’ R&D programs were complementary. Beecham had several new products ready for market while SmithKline was at the opposite end of the R&D cycle, promising results down the road. Geographically, Beecham’s strength in Europe fit well with Smith-Kline’s coverage in the United States and Japan. Bauman expressed his intentions to cut costs by eliminating administrative and production personnel, rather than by paring sales or research staffs.

1990s and Beyond

In the early 1990s SmithKline Beecham concentrated on reducing the debt it had taken on to complete the merger. The company made a number of disposals, mainly in the consumer products area, including its cosmetics businesses, its adhesives unit, Brylcreem and other hair care brands, and other non-healthcare products. In early 1994 its consumer side was reorganized as the consumer healthcare division, focusing solely on OTC drugs, toothpaste and toothbrushes, and nutritional drinks. The company’s OTC drug offerings were later expanded through the introduction of nonprescription versions of prescription drugs, including the launch of Tagamet HB. On the pharmaceutical side, SmithKline announced in late 1992 that it would withdraw from long-term research into gastrointestinal drugs to concentrate its R&D efforts on five areas: the central nervous system, the heart and lungs, anti-infectives, inflammation and tissue repair, and vaccines. Among the pharmaceuticals introduced by SmithKline in the early and mid-1990s were Relafen, an anti-inflammatory drug for the treatment of arthritis; Engerix B, a hepatitis B vaccine; Havrix, a hepatitis A vaccine; Kytril, an antinausea product used in treating cancer patients; and Seroxat/Paxil, an antidepressant. These introductions helped counter the plummeting sales of the prescription version of Tagamet, which went off patent in 1994.

In 1993 SmithKline spent US$125 million to enter into a research collaboration agreement with and take a seven percent stake in Human Genome Sciences Inc., a newly formed enterprise actively identifying and describing the functions of human genes. The agreement gave SmithKline rights to develop drugs based on the gene sequencing information discovered by Human Genome Sciences. This collaboration was slow to pay off in terms of new medicines.

Jan Leschly, a native of Denmark who as a young man was a professional tennis player ranked as high as number ten in the world, was named CEO of SmithKline in 1994. In May of that year, the company acquired Diversified Pharmaceutical Services, Inc.—a leading U.S. pharmaceutical benefit manager (PBM)—for US$2.3 billion (£1.6 billion). PBMs, which acted as drug wholesalers for managed care organizations, were growing rapidly in the United States, in tandem with the growth of health maintenance organizations and other managed care enterprises. SmithKline continued its acquisitive ways in 1994 with the August purchase of Sterling Health, a specialist in branded OTC medicines, for US$2.9 billion. A few weeks later SmithKline sold Sterling’s North American operations to Bayer AG for US$1 billion. The net result of these moves was that SmithKline expanded its OTC presence in Western Europe significantly and even more dramatically in Eastern Europe and Asia; the company became the third largest seller of OTC products in the world, and the largest in Europe. It gained several key brands, including the analgesic Panadol and the gastrointestinal remedy Phillips Milk of Magnesia. Rounding out a year filled with large transactions, SmithKline in late 1994 sold its animal health business to Pfizer Inc. for US$1.45 billion (£920 million), a move enabling SmithKline to focus further on the human healthcare market.

During the mid-to-late 1990s SmithKline Beecham began marketing a number of new products. On the OTC side, the company moved into the smoking cessation sector with the launch of Nicorette gum. In 1996 the FDA approved NicoDerm CQ, a smoking cessation patch. These products held 90 percent of the OTC smoking cessation market in the United States through the late 1990s. Also in 1996 came the launch of the pharmaceutical Hycamtin, which was designed to treat ovarian cancer and small cell lung cancer. In the vaccine arena, Smith-Kline introduced Twinrix, the first combined hepatitis A and B vaccine; the Infanrix line of combination vaccines, which included protection against diphtheria, tetanus, and pertussis (or whooping cough) in its basic formulation, with additional protection against other diseases provided through other formulations; and LYMErix, which was introduced in 1998 as the first vaccine in the world for the prevention of Lyme disease.

SmithKline’s collaboration with Human Genome Sciences had yet to pay off in terms of new medicines, but was uncovering numerous leads for potential development. Smith-Kline simply did not have the resources, however, to follow up on every lead. Therefore, in 1996 the company began licensing the Human Genome Sciences data to other pharmaceutical companies, including Schering-Plough Corporation, Takeda Chemical Industries Ltd., and Merck. The following year, SmithKline joined with Incyte Pharmaceuticals to create another biotechnology venture called diaDexus. This venture was focused on developing new diagnostic tests based on gene discoveries. One of its first undertakings was the development and commercializing of a new cervical cancer screening technology which had been originally conceived by Cancer Research Campaign Technology Limited.

The need for greater resources to investigate the many opportunities being uncovered by the biotechnology revolution led SmithKline to enter merger discussions, first with American Home Products Corporation, which began in 1997 and ended in early 1998, and then with U.K. rival Glaxo Wellcome. In late January 1998 Glaxo and SmithKline announced that they were on the verge of announcing a merger valued at between US$65 billion and US$70 billion. This would have been the largest corporate merger ever, but the deal fell apart in late February following disagreements between the two companies’ CEOs over leadership of the combined company.

In the aftermath of this botched union, SmithKline refocused its operations on two core areas: pharmaceuticals and consumer healthcare. To this end, in April 1999 it sold Diversified Pharmaceutical Services to Express Scripts Inc. for £422 million (US$700 million) in cash, resulting in an after-tax loss of £446 million (US$740 million), which was recorded in 1998. Around this same time, the company announced a four-year restructuring plan in which it would close down excess manufacturing plants and lay off about 3,000 people, resulting in annual savings of £200 million (US$332 million) by 2002. SmithKline planned to take pretax charges of up to £750 million (US$1.25 billion) over the four-year period. In August SmithKline completed the sale of its clinical laboratory unit—SmithKline Beecham Clinical Laboratories—to Quest Diagnostics, Incorporated for £618 million (US$1.03 billion) and a 29.2 percent equity interest in Quest.

In mid-1999 SmithKline received FDA regulatory approval of Avandia, a diabetes drug which it began comarketing with Bristol-Myers Squibb; and for a new use for Paxil, that of treating people suffering from severe “social phobia”—extreme bouts of shyness that could be severely debilitating and traumatic. In December 1999 Leschly announced that he would retire as chief executive in April 2000 and be replaced by COO Jean-Pierre Gamier. Rumors instantly began to surface suggesting that the leadership change would lead to renewed merger talks with Glaxo, but there was no immediate suggestion that SmithKline Beecham was certain to change direction with Leschly’s departure. The company appeared capable of continuing on a path of organic growth, with several pharmaceuticals in advanced stages of development, including: Ariflo, for chronic obstructive pulmonary disease and for asthma; Idoxifene, for osteoporosis and breast cancer; Factive, an antibiotic for the treatment of respiratory tract and urinary tract infections; Bexxar, for non-Hodgkin’s lymphoma, a cancer of the immune system; and Locilex, a topical antibiotic for the treatment of infected diabetic foot ulcers.

Principal Subsidiaries

Beecham Group p.l.c.; SB Pharmco Puerto Rico Inc. (U.S.A.); SmithKline Beecham Corporation (U.S.A.); SmithKline Beecham (Australia) Pty Ltd; SmithKline Beecham Biologicals S.A. (Belgium); SmithKline Beecham Biologicals Biotech S.A. (Belgium); SmithKline Beecham Biologicals Manufacturing S.A. (Belgium); SmithKline Beecham Brasil Ltda (Brazil); Sino-American Tianjin Smith Kline & French Laboratories Ltd (China; 55%); SmithKline Beecham Laboratoires Pharmaceutiques S.A. (France); SmithKline Beecham Consumer Healthcare G.m.b.H. (Germany); SmithKline Beecham Pharma G.m.b.H. (Germany); SmithKline Beecham (Cork) Ltd (Ireland); SmithKline Beecham Dungarvan Ltd (Ireland); Smith-Kline Beecham S.p.A. (Italy); SmithKline Beecham Seiyaku K.K. (Japan); SmithKline Beecham Mexico S.A. de C.V.; SmithKline Beecham S.A. (Spain).

Principal Competitors

Abbott Laboratories; American Home Products Corporation; AstraZeneca PLC; Bayer AG; Bristol-Myers Squibb Company; Colgate-Palmolive Company; Corning Incorporated; Eli Lilly and Company; Glaxo Wellcome pic; Hoechst AG; Johnson & Johnson; Laboratory Corporation of America Holdings; Merck & Co., Inc.; Mylan Laboratories Inc.; Novartis AG; Pfizer Inc.; Pharmacia & Upjohn, Inc.; The Procter & Gamble Company; Rhone-Poulenc Rorer Inc.; Roche Holding Ltd.; Schering-Plough Corporation; Unilever; Warner-Lambert Company.