In the 1960 Billy Wilder movie "The Apartment", an opening scene shows the star, Jack Lemmon, toiling at the office, surrounded by row upon row of desks, teeming with row after row of grey flannel suits, in a space seemingly acres in size.

For those who wonder how a classic black-and-white film can relate to the modern biotech world, fast forward from mid-century to the end of the millennium, to contemplate the prospect of the Glaxo SmithKline behemoth, with row upon row of laboratory benches, teeming with row after row of white smocked scientists, with a budget seemingly infinite in size.

Against such an arrayed force, particularly as portrayed in the general media, one might wonder how disease itself can survive, much less a fragmented and always money-hungry biotech industry.

The proposed Glaxo SmithKline merger, at least as described publicly in the past week, would differ from the last wave of pharma mergers, many of which were driven by the desire to control channels and markets in the managed care era. This merger, in contrast, has been described as driven by the need to combine research programs in the age of genomics.

The rationale behind such a merger challenges the underlying business paradigm on which the biotechnology industry has been built: that smaller companies will be more productive than larger ones because they are less bureaucratic, more efficient, quicker and more creative.

New benchmark

For years, Merck has been the gold standard for comparing the relative value of the biotech industry in terms of research budgets, total employment and market capitalization. A Glaxo-SmithKline combine would redefine the comparator. Glaxo spent £1.2 billion (US$2 billion) in 1997 on R&D, while SmithKline spent £764 million (US$1.2 billion) in 1996, for a combined total that will likely be more than £2 billion (US$3.3 billion) once SmithKline releases its 1997 numbers, versus Merck's $1.5 billion in 1996.