Friday, 18 January, 2019

Drug-maker, GlaxoSmithKline, to split after striking Pfizer consumer health deal

Drug-maker, GlaxoSmithKline, to split after striking Pfizer consumer health deal Drug-maker, GlaxoSmithKline, to split after striking Pfizer consumer health deal
Melissa Porter | 20 December, 2018, 11:38

It is meanwhile a final act for Pfizer CEO Ian Read, who leaves his post at the end of the year, handing the reins over to the company's chief operating officer Albert Bourla.

Pfizer consumer health products include Advil pain pills and Centrum vitamins. Its consumer products business will be a joint venture with Pfizer, which was trying to get rid of its consumer business to focus on prescription drugs for about a year, reported the Wall Street Journal.

GlaxoSmithKline, one of the world's biggest pharmaceutical companies, announced that it will split in two Wednesday as part of a new joint venture with USA -based pharmaceutical giant Pfizer.

Shareholders welcomed the news and the shares jumped 7 per cent, with Jefferies analysts saying the future separation could crystallize value.

The new joint venture with Pfizer is expected to generate total annual cost savings of £500m by 2022 for expected total cash costs of £900m and non-cash charges of £300m.

GSK said it would have a 68-percent controlling equity interest in the joint venture that will have combined sales of about £9.8 billion ($12.7 billion, 10.9 billion euros).

The deal paves the way for Glaxo to break itself up to form two separate UK-based companies - one focused on pharmaceuticals and vaccines, and the other on consumer healthcare.

Some planned divestments of $1.3 billion would be expected to cover the costs of the integration.

Up to 25% of the cost savings to be reinvested in the business.

The consumer tie-up follows a deal by GSK earlier this year to buy Novartis's stake in their consumer joint venture for US$13 billion and comes as Walmsley tries to reshape Britain's biggest drugmaker, which has seen its shares move sideways for years.

Shares in GSK rose 6 percent on the news.

In a bid to reassure investors of its financial strength, GSK extended its guarantee on the dividend by stating it expected to pay unchanged dividends of 80 pence per share for 2019.

The tie-up was announced nine months after fellow United Kingdom drug firm RB left the race for Pfizer's consumer arm - leaving the door open for GSK.