GlaxoSmithKline aims for the whole consumer-health shebang with $10.3B Novartis JV buyout

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GlaxoSmithKline currently owns 63.5% of the industry-leading consumer health joint venture it shares with Novartis.

Next March, GlaxoSmithKline will have the option to buy out Novartis’ stake in the pair’s industry-leading consumer health JV. And it may already be getting prepared.

The British drugmaker is getting its ducks in a row for an £8 billion ($10.3 billion) offer for its partner’s 36.5% share, top shareholders told The Sunday Times. Industry watchers say Novartis could use the extra dough to help fund a megatakeover—and word is, the potential target is AstraZeneca.

GSK declined to comment.

The one-two deal punch may seem far-fetched, with Novartis pledging to eschew such enormous mergers. But the GSK consumer JV move lines up with the company's previous statements, and its new CEO, Emma Walmsley, headed up that venture until her promotion in March.

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A deal could also answer critics calling for some dramatic action from GSK, if not in the way some might have hoped. The news follows just a couple of days after one key GSK investor, Neil Woodford, walked away from the stock. Woodford, who had pushed for a companywide breakup that would set consumer health on its own, griped in a blog post that his viewpoint had been “ultimately ignored—repeatedly.”

Glaxo has said it aims to hang onto the business, and Walmsley—who just so happens to be the former head of the JV—confirmed that strategy on the company’s first-quarter earnings call.

RELATED: Glaxo's new chief stands by three-unit structure, foreshadows cultural changes amid 'quiet' Q1 results

Buying out Novartis would give GSK control of the biggest consumer health operations on the globe. GSK has "been consistent all along that this is a business they want to own, and will move forward when the time is right,” one investor told the Times.

Meanwhile, Novartis’ buyout ambitions—if they really include AZ—could reshape the oncology landscape, much the way the Swiss pharma giant did when it nabbed Glaxo’s cancer assets as part of the multibillion-dollar asset swap that set up the consumer JV.

While the Basel-based company has plenty going on in oncology, it lacks a first-wave immunotherapy program, and AstraZeneca’s has shown some major progress over the past couple of weeks with the initial approval of Imfinzi (durvalumab) and follow-up data that could give the brand-new med a big market boost.