Glaxo, Pfizer to Combine Consumer-Health Businesses - Update
December 19 2018 - 5:46AM
Dow Jones News
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 Denise.Roland@wsj.com
(END) Dow Jones Newswires
December 19, 2018 05:31 ET (10:31 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
GSK (NYSE:GSK)
Historical Stock Chart
From Mar 2024 to Apr 2024
GSK (NYSE:GSK)
Historical Stock Chart
From Apr 2023 to Apr 2024