GSK changes its tune, plans to hold on to aging drug portfolio

GlaxoSmithKline ($GSK) has long weighed a sale of some of its established drugs, planning to hive off $3 billion worth of older products to slim down its sagging portfolio and make room for fast-growing drugs. Now the company is changing its tune, announcing today that it will hold on to its aging products.

"The company has evaluated all bids received and has concluded, consistent with its key criteria of maximizing shareholder value, not to pursue divestment of these products," GSK said in an SEC filing.

In October, GSK said that it would sell older meds by geographic region, reflecting buyers' interests. Companies such as Denmark's Lundbeck and India's Lupin were listed as possible suitors, and brands up for sale included antidepressant Paxil, stomach-acid reducer Zantac and nausea fighter Zofran--drugs expected to have combined 2014 sales of around £1 billion ($1.6 billion) but face competition from cheap generics. GSK would hold on to the rights for the drugs in emerging markets, and it was unlikely that any bidders would walk away with the entire portfolio, Reuters reported.

In November, GSK caught wind of a more enticing offer when private equity firm Apollo Global Management said it would bid on the company's entire portfolio of drugs, people familiar with the matter told Reuters.

GSK's decision not to sell its aging meds comes on the heels of corporate restructuring, as the company attempts to swing its numbers northward and bounce back from disappointing sales for asthma behemoth Advair. The company yesterday announced that it would cut at least 900 sales and research jobs in the U.S. as part of a $1.6 billion restructuring effort, with 350 jobs to be slashed in the first quarter of 2015, another 450 in Q2 and the rest later in the year.

The move also comes in the wake of GSK's pending deal with Novartis ($NVS). In April, the company engineered a $20 million asset swap with the Swiss drugmaker, passing its oncology business to Novartis, picking up the latter's vaccines unit and setting up a consumer health joint venture dubbed GSK Consumer Healthcare to market over-the-counter products with an estimated $11 billion in sales. Novartis earlier this week agreed to sell its Habitrol nicotine patch business to Dr. Reddy's Laboratories to clear the deal of an antitrust hurdle with the U.S. Federal Trade Commission.

GSK is far from the only drugmaker that has explored a sale of aging meds. Abbott Laboratories ($ABT) recently unloaded a number of its older drugs to Mylan ($MYL) in a $5.3 billion deal. In September, AstraZeneca ($AZN) sold off 18 of its aging meds to specialty generics maker IGI Laboratories, and Merck ($MRK) and Sanofi ($SNY) are also looking to put some brands on the chopping block. But Sanofi's plans have stalled for now due to internal squabbles regarding the sale.

- here's GSK's SEC filing
- read the Reuters story

Special Report: Top 10 pharma companies by 2013 revenue - GSK

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