GlaxoSmithKline and Pfizer are expecting to combine their consumer health businesses later this year with the aim of an eventual spinoff. But before that can happen, some products will have to go.
GSK has started selling off some non-core consumer products, Reuters reported, citing three sources familiar with the matter. Back in December when the merger deal was announced, the British drugmaker said it would cut around £1 billion ($1.26 billion) worth of assets within the unit to cover the costs of the integration.
Separately, an update posted by the European Commission said GSK on Wednesday made commitments to win EU antitrust clearance. The regulator said it would decide by July 10 whether to accept the proposal.
GSK declined to comment on both matters.
Three portfolio bundles are up for grabs. GSK has already sent materials on Latin American drugs and Physiogel skin care brands to possible bidders, while bidding for some European drugs will kick off after the summer, the sources told Reuters.
One source said the Latin American franchise, which boasts revenues of about £90 million, could be sold to local players. Meanwhile, Takeda Pharmaceutical is also looking to sell its Latin American business to help pay off debt related to the Shire buyout, and Brazil’s largest drugmaker EMS Pharma could be the front-runner, Reuters previously reported.
The European products represent about 40% of the total £200 million to £300 million in revenues of the combined for-sale assets, according to one person, and it may be the most attractive. Some private equity firms and frequent pharmaceuticals buyers are said to be eyeing the package. Those include Advent International, CVC Capital Partners, Bain Capital and Cinven. Look familiar? These funds are reportedly also sizing up Bayer’s animal health unit.
In 2018, Advent bought Sanofi’s European generics business Zentiva for €1.9 billion ($2.2 billion). Around the same time, CVC shelled out €3.03 billion for Italian drugmaker Recordati. As for Bain and Cinven, they recently bought Germany’s Stada and took it private.
Earlier this month, Stada unveiled a deal to buy five skincare products and one pediatric cough remedy from GSK. “This will strengthen Stada’s position as a go-to partner in the European healthcare market, and will seize the opportunity to be a leading company in consumer health as well as generics," Stada CEO Peter Goldschmidt said in a statement at the time.
For GSK, folding in Pfizer’s OTC business will create a consumer giant with about $12.7 billion in sales, putting it ahead of rivals Johnson & Johnson, Bayer and Sanofi. To be run by GSK, the new unit will become the leader in areas such as pain relief, vitamin and mineral supplements, respiratory and oral care.
As Big Phama companies recently followed one another out of consumer health to focus on innovative medicines, GSK is also planning to spin off the joint venture into a separate corporation and list it in London within three years.