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-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 [e-mail]

(END) Dow Jones Newswires

December 19, 2018 03:36 ET (08:36 GMT)

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