GlaxoSmithKline and Pfizer seem to have contradictory plans for their consumer health joint venture.
During a Tuesday presentation at the J.P. Morgan Healthcare Conference, Pfizer chief Albert Bourla said he believes the JV is heading toward an IPO within three to four years in a move that provides the New York pharma a “clear exit strategy.”
Maybe not, GSK’s chief strategy officer David Redfern said in an interview with Bloomberg the following day.
“Actually we haven’t decided anything,” Redfern was quoted as saying. “When we announced the deal, we said we expect it to separate within three years, but actually up to five years. And it’s entirely our decision.”
In December 2018, when the two companies unveiled the deal to merge their consumer health businesses into one huge JV with 2017 sales of $12.7 billion, GSK said it intended “to separate the joint venture from GSK via a demerger of its equity interest to GSK shareholders” and list it on the U.K. equity market. But it also said it “retained the right” for a straightforward IPO.
As for timing, the agreement specifies that within the first five years, GSK, which owns 68% of the JV, will “have the sole right to decide” a separation path for the JV. But after the fifth anniversary of deal closing, both GSK and Pfizer will have a say.
“We have the control of the timing, for up to five years […] but our intent is to demerge within three,” GSK CEO Emma Wamsley said on a conference call back then.
For the business now, GSK is trying to keep its mind focused on integration and sales growth, Redfern told Bloomberg.
“We don’t want it too distracted right now thinking about capital markets,” he reportedly said. “Whether it’s an IPO or just a straight spin, all options are on the table.”
The ultimate destination is still a separation; that part hasn't changed. Both Glaxo and Pfizer are looking to focus their energies on higher-margin innovative medicines.
For Pfizer, after striking the consumer deal with GSK, it agreed to offload its off-patent drugs franchise, Upjohn, in a merger with Mylan, leaving only the R&D-heavy pharma portfolio and pipeline.
Meanwhile, GSK is gearing up in oncology under Walmsley. With its $5.1 billion takeover of Tesaro, it snared PARP inhibitor Zejula and “highly skilled employees with deep expertise in oncology,” Walmsley said in her Tuesday JPM presentation.
Those talents, spanning R&D, regulatory, medical affairs and sales, will help with GSK’s three oncology launches expected in 2020. These include Zejula’s potential use in first-line ovarian cancer maintenance, belantamab mafodotin in relapsed/refractory multiple myeloma and dostarlimab in second-line endometrial cancer.