Glaxo, Pfizer to Combine Consumer-Health Businesses - Update
December 19 2018 - 3:51AM
Dow Jones News
By Carlo Martuscelli and Denise Roland
Pfizer Inc. and GlaxoSmithKline PLC plan to combine their
consumer health-care units, and eventually spin the joint venture
off -- creating a global giant in the business of selling drugstore
staples like Advil and Sensodyne toothpaste.
The deal represents a surprise ending to a monthslong process by
Pfizer to shed the consumer business, as it and other big
pharmaceuticals focus more heavily on their higher margin
prescription-drug units. GlaxoSmithKline has been pursuing the same
focus, though has until now stayed committed to its consumer health
division, which GlaxoSmithKline's current chief executive led
before her promotion to the top job.
Glaxo will hold a 68% stake and Pfizer the remaining 32%. The
U.K. pharmaceutical company said it expects to close the deal in
the second half of 2019. It intends to separate the joint venture
within three years of closing via a listing on the U.K. market.
The deal will free both up to concentrate on prescription
medicine, which tend to be more profitable. There are big risks.
Companies have used the steady revenue of consumer drugs to
insulate them from the sometimes boom and bust cycles of developing
the next pharmaceutical blockbuster.
The 2017 global sales for the combined business were about $12.7
billion.
Glaxo said the move allows it to build on its buyout of Novartis
International AG's stake in a previous health-care joint venture, a
$13 billion deal that was announced earlier in the year. The
creation of the JV will help increase cash flow, allowing it to
strengthen its pharmaceuticals division through increased research
investment, Glaxo said.
"With our future intention to separate, the transaction also
presents a clear pathway forward for GSK to create a new global
pharmaceuticals/vaccines company, with an R&D approach focused
on science related to the immune system, use of genetics and
advanced technologies, and a new world-leading consumer health care
company," Chief Executive Emma Walmsley said.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
December 19, 2018 03:36 ET (08:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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