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The Billion-Dollar Battle: Merck v Glaxo by Matthew Lynn, William Heinemann,
pp 244, £16.99

With this title and Merck and Glaxo as contestants, you could be forgiven
for expecting a blow-by-blow account of a no-holds-barred assault between
these two giants as Glaxo attempts to knock Merck from its position as the
premier – in money terms – purveyor of medicines to the world.

An author’s note, however, bids us raise our sights. As well as being
a book about the drugs industry, ‘its heroes and demons; . . . it is a story
about the soul of capitalism’. Written in the form of a morality play, with
three protagonists, the ‘demon’ takes the stage first. It is Hoffman La
Roche, Swiss originator of Valium, which ‘became the biggest and most profitable
drugs company ever’ in the 1960s, and a model for the industry. Even then,
‘before it blew the whole caboodle away in a whirlwind of misshapen desire,
Roche was a walking caricature of capitalist evil’.

Part Two, the centrepiece and largest section is headed, ‘The Aristocrat:
Merck’. Introduced many pages before in the introduction as a ‘square jawed
and clean cut’ hero, a description of the company runs: ‘Wherever Merck
goes, wherever it swanks and swerves, it carries with it a question: can
nice guys win? And it brings an answer in its baggage as well: of course
they can – look at us’. The final scene in this ‘act’ is called: The Philosopher
King.

‘The Incursor: Glaxo’ (the author’s villain) ends the play, the opening
chapter entitled ‘Badlands’ (‘extensive uncultivable eroded tracts in arid
areas’, according to the Concise Oxford Dictionary). Ironically, the company
had earlier been introduced as the most dramatic business success of the
decade: ‘From a lowly status it has progressed to become the UK’s fourth
largest company . . . ‘ Since this book was written, Glaxo doubled its share
price in 1991 and announced profits of £1.3 billion.

According to Matthew Lynn, Glaxo’s success is due entirely to its discovery,
development and selling of ranitidine (Zantac), a treatment for peptic ulcers
which reduces gastric acid secretion by blocking histamine (H₂)
receptors. The speed at which it overtook the first ever H₂-blocker,
cimetidine, invented by SKF, led other firms to follow suit. Among them
was a Japanese company from which Merck bought a licence to make and sell
famotidine (Pepcid), which is marketed in Britain by a Merck subsidiary.
This is a long-standing practice among drug companies. For example, Glaxo
acquired a licence 35 years ago from Merck for its steroid drug prednisolone.

Some see this step by Merck to get into the ulcer market as a response
to Glaxo’s backing out at the last moment from a deal with Merck to market
Zantac in the US. Glaxo then turned to Hoffman La Roche to do the job for
it on terms much more favourable than were on offer from Merck. In between,
in 1982, Merck agreed to take over North American licences on drugs manufactured
by the Swedish firm, Astra, the inventor of a new class of ulcer drugs,
known as the ‘proton pump inhibitors’, the first of which was omeprazole
(Losec).

So the ‘battle’ billed in the title is over which drug will dominate
the multimillion dollar ulcer market in 10 years’ time. Lynn believes, ‘Glaxo
is fated to replay the tragedy of Roche’, and cites as evidence Glaxo’s
efforts to queer the pitch for Losec from the start. Purple prose and all,
this experienced business journalist’s view of the anatomy of capitalism’s
soul is worth reading.