Earlier this year, GlaxoSmithKline ($GSK) announced that it would sell off some of its older drugs to help revive profits and slim down a sagging portfolio. Now, the company is planning to put $3 billion worth of those older medications on the chopping block, shedding products by geographical region.
GSK will take bids next month for the aging products and will likely sell off-patent meds marketed in North America and Europe, Reuters sources say. Companies such as Lundbeck and Lupin were listed as potential bidders, along with the private equity firm KKR. Brands up for sale include the antidepressant Paxil, migraine treatment Imitrex, stomach acid-reducer Zantac and nausea fighter Zofran. They're expected to have combined 2014 sales of around £1 billion ($1.6 billion) but face competition from cheap generics.
The company's plan to hive off the products by region reflects buyers' interest, as Denmark's Lundbeck and India's Lupin are both seeking to expand in the U.S. Private equity firms are said to be looking at specific products. It's unlikely that any bidders will walk away with the entire portfolio, Reuters reports.
GSK plans to hold onto rights for the drugs in emerging markets, where demand for the products is still growing.
The sale comes at a critical moment for drugmakers like Lundbeck that face patent expirations for some of their top-selling products, Sydbank analyst Soren Lontoft Hansen told Reuters. "There's a giant potential on the U.S. market. It makes sense to use the existing sales force to take on a few more drugs. So it will probably be some drugs that complement some of Lundbeck's existing drugs," Hansen said.
A sale could also yield more immediate returns for GSK, as the company waits to complete its three-part deal to sell and combine assets with Novartis ($NVS). In April, the drugmakers said they would swap business units--with Glaxo's oncology business going to Novartis and the latter's vaccines unit to GSK--and set up a consumer health joint venture to market over-the-counter products with an estimated $11 billion in sales, under the name GSK Consumer Healthcare. The companies expect to close the multipart deal sometime early next year, the companies said when the deal was announced.
GSK is not the only Big Pharma player shopping a portfolio of older products. Abbott Laboratories ($ABT) recently sold off many of its older products to Mylan ($MYL) in a $5.3 billion deal, and Merck ($MRK) and Sanofi ($SNY) are also looking to lighten their loads. But Sanofi's plans to sell were said to be stalled earlier this month, as top-level management could not agree on how to move forward with the deal.
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