Glaxo, Pfizer to Combine Consumer-Health Businesses - Update

By Carlo Martuscelli and Denise Roland 

Pfizer Inc. and GlaxoSmithKline PLC plan to combine their consumer-health units, and eventually spin off the joint venture -- creating a global giant selling drugstore staples like Advil and Sensodyne toothpaste.

The deal announced Wednesday is an unexpected ending to a yearlong process by Pfizer to shed its consumer business, as it and other pharmaceutical companies focus more on higher-margin prescription-drugs. Glaxo has been pursuing the same focus, though has until now stayed committed to its consumer business, which its chief executive led before her promotion to the top job.

Glaxo will hold a 68% stake and Pfizer the remaining 32% of the new joint venture, which generated combined sales of $12.7 billion last year.

The British company's investors welcomed the deal, sending Glaxo shares up 7% in early trading in London.

Glaxo said it expects to close the deal in the second half of 2019 and that it intends to separate the joint venture within three years of closing via a listing on the U.K. stock market.

The deal will free up both companies to concentrate on prescription medicines, which tend to be more profitable, though higher risk. Companies have used the steady revenue of consumer drugs to insulate them from the sometimes boom and bust cycles of developing the next blockbuster medicine. For Glaxo, that role will fall to the vaccines business -- which tends to generate steadier revenue flows -- after it sheds the consumer-health venture. Pfizer sells vaccines too, as well as generic drugs.

For Glaxo the combination builds on its buyout of Novartis AG's stake in a previous health-care joint venture, a $13 billion deal that was announced earlier in the year. The new business will boost cash flow, allowing it to strengthen its pharmaceuticals division through increased research investment, Glaxo said.

Glaxo Chief Executive Emma Walmsley said the deal would allow it to create a new pharmaceuticals and vaccines company, with its research and development efforts focused on science related to the immune system, genetics and advanced technologies.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

December 19, 2018 05:31 ET (10:31 GMT)

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