Mylan, private equity, Indian pharmas to compete for cast-off GSK brands

GlaxoSmithKline's corporate headquarters in Brentford, England--Courtesy of GlaxoSmithKline

The second round of bidding for a portfolio of aging GlaxoSmithKline ($GSK) drugs is about to begin, and a bevy of big names is expected to participate. The product portfolio--which includes such drugs as Paxil for depression, the antimalarial Malarone, and the fish-oil based Lovaza--brings in about £1 billion ($1.7 billion) in annual sales.

Among the companies planning to bid on the GSK products are generic drug giant Mylan ($MYL), and private equity groups TPG Capital, Advent International, KKR and Warburg Pincus, according to anonymous sources interviewed by The Wall Street Journal. Several Indian pharma companies are also interested, the sources said. Analysts now estimate the portfolio could fetch around £2 billion ($3.3 billion).

GSK began casting some of its non-core assets in 2012, making such moves as selling the North American rights to 17 of its over the counter products to Prestige Brands, and unloading a line of drinks to Japan's Suntory Beverage and Food for $2.1 billion. Last fall, GSK sold its thrombosis products Arixtra and Fraxiparine to South Africa's Aspen Pharmacare for about $1.2 billion.

In May of this year, GSK confirmed it was evaluating options for about 50 of its remaining brands. Then rumors emerged that several private equity firms were considering merging GSK's off-loaded brands with products from Sanofi ($SNY), which is also looking to get rid of some if its aging drugs. With private equity firms sitting on an estimated record-high $1.2 trillion in cash, it would certainly be no surprise for them to grab some of these pharma carve-outs and try to turn them into gold.

But don't count Mylan out of this competition. The Pittsburgh-based company has already shown its merger mettle, striking a $5.3 billion deal for 100 Abbott ($ABT) drugs just last month. Mylan expects the Abbott products to boost its annual sales from $7 billion to $9 billion and to add 25 cents to its earnings per share in 2014. And last year, Mylan picked up India's Agila Specialties for $1.6 billion, helping to expand its worldwide commercial and manufacturing footprint.

- here's the WSJ story (sub. req.)

Special Report: The top 10 pharma companies by 2013 revenue - GlaxoSmithKline | Pharma's top 10 M&A deals of 2013

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