In the hope of cutting costs and mitigating the risks of research into new treatments, pharmaceutical giants GlaxoSmithKline PLC and Pfizer Inc. will pool resources to create a new company.

Announced Thursday, the deal is the result of declining revenues and companies in an attempt to reduce the cost factor are teaming up with competitors to share the risks and costs of developing new drugs. In this collaboration of the world's two biggest drug companies, London-based Glaxo will team up with New York-based Pfizer to create a "more sustainable" organization.

The companies plan to merge their HIV operations into a new company and they said that the new HIV business would be more sustainable and broader in scope than either individually, with the potential for cost savings by melding the commercial operations.

"What you are seeing is an industry facing the realities of the challenges that exist and also, to some degree, a new generation of management being prepared to come forward with different solutions," said Glaxo Chief Executive Andrew Witty.

The new company will be based in London and run by Glaxo executive Dr. Dominique Limet, now head of its personalized medicine strategy. In the U. S. the headquarters will be in Research Triangle Park, N. C., with Glaxo's American headquarters.

Witty said they expected savings of $90 million, or 60 million pounds from cutting administration and marketing overlaps while the research and development operations would remain unchanged.

"The combination of a broad current revenue base and a new diverse pool of pipeline assets provide a significant platform to invest in developing and delivering new HIV medicines," Witty told analysts during a conference call.

He added that the new company will maintain "not-for-profit pricing" of AIDS drugs in needy countries and will continue community support and AIDS prevention programs. In Glaxo's existing HIV drugs some are with patents near expiration while Pfizer has a better range of drugs in development. Analysts have noted that Glaxo's HIV drug sales have not risen with the current market trend of 14 % shown last year.

In the new company Glaxo will hold an 85 % interest while Pfizer will hold 15 % and the stakes will increase or decrease depending on which company produces more successful drugs. The new venture will have a 19 % market share, just behind leader Gilead Sciences Inc. and will have several market-leading therapies, including Combivir, Epzicom/Kivexa and Pfizer's Selzentry/Celsentri.

The company will have an initial capitalization of about $373 million, or 250 million pounds, 90 % from Glaxo. Witty said the new company can later ask its board of seven executives from Glaxo and two from Pfizer, for more funding.

"It's going to have two parents out there with, I think, a very rapid decision-making mechanism to allow it to be funded for what it needs to do," he said. "It will also have the flexibility to do other deals and license in other (drugs)."

The company will have six drugs in human testing, four in mid-stage tests, and a total of 17 experimental compounds with a key goal to develop drugs that overcome resistance to the HIV virus, in combination pills.