GSK to create £9.8bn consumer health joint venture

GlaxoSmithKline CEO Emma Walmsley, in a final step of revamping unveiled plan to split the group in to two, creating a new £9.8bn consumer health business through a joint venture with US rival Pfizer.

The newly formed UK-based group will fold Pfizer brands such as Advil, Centrum and Caltrate into GSK’s existing line of well-known over-the-counter labels such as Sensodyne, Nicorette and Excedrin, turning it into the world’s largest provider of medicines sold directly to the public.

In exchange for contributing its smaller consumer products units to the venture, Pfizer will get a 32 per cent stake, with GSK owning the 68 per cent. GSK intends to spin off the division within three years through out a UK stock market listing.

The prescription drug and vaccine business still remains in the hands of the existing shareholders.

The move is a result of nine months of deal making by Ms Walmsley, who rose through the consumer division and took over as CEO from Andrew Witty in April 2017. She vowed to focus more on developing and commercialising lucrative new prescription drugs.

Ms Walmsley has strengthened GSK’s consumer business by taking over a joint venture with Novartis for $13bnm then shedding its nutrition unit, including Horlicks malted drink brand to Unilever for $4bn. She also acquired cancer-focused US biotech Tesaro this month for $5.1bn.

“Ultimately our goal is to create two exceptional, UK-based global companies with appropriate capital structures that are each well positioned to deliver improving returns to shareholders and significant benefits to patients and consumers” Ms Walmsley said.

Shares in GSK closed 3.8 per cent higher in London while Pfizer shares were up 0.3 per cent in late US trading.

“Both Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses. The new group would be the global leader in over-the-counter medicinal products with a market share of 7.3 per cent ahead of our competitors  Johnson and Johnson , Sanofi and  Bayer  which holds about 4 per cent of the market shares each” Ian Read, CEO of Pfizer said.

GSK will have six directors on the board of the new venture with Ms Walmsley as the chair and  Pfizer will have three.