Pfizer, already flush with cash, will reap $16B from selling shares in GSK consumer health spinoff

By combining its consumer health business with GSK's in 2019, Pfizer made clear its plan to focus on innovative medicines and vaccines. Now, in exiting the consumer market, the New York pharma is collecting a huge cash windfall.

Pfizer intends to exit its 32% stake in Haleon, the GSK consumer health joint venture that’s on track to become a standalone company next month, GSK said Wednesday. Haleon is expected to start trading on the London Stock Exchange on July 18, GSK said.

Pfizer will pull out “in a disciplined manner,” the filing shows. The U.S. drugmaker has inked an “orderly marketing agreement” with its Big Pharma counterpart requiring them to inform each other before making any Haleon share sales.

As of April 3, Pfizer’s stake in Haleon was valued at $15.8 billion, according to a Pfizer quarterly filing in May. When Pfizer formed the franchise with GSK in 2019, its equity was worth $15.7 billion.

The cash inflow will once again boost Pfizer’s financial position on top of the big pile of money it has built from selling COVID-19 products. The cash could help Pfizer grow its pipeline of innovative drugs and vaccines through dealmaking.

Counting a $16 billion injection from selling the Haleon shares, SVB Securities analysts in December projected that Pfizer could have $175 billion in M&A firepower by the end of 2022.

Pfizer has already put some of the cash toward M&A. A few weeks ago, Pfizer put down $11.6 billion to buy Biohaven Pharmaceuticals along with the latter’s CGRP migraine drug portfolio led by Nurtec ODT.

Earlier this year, the Big Pharma company also closed a $6.7 billion acquisition of Arena Pharmaceuticals, featuring an S1P modulator for inflammatory diseases.

On GSK’s side of the Haleon spinoff, the British pharma has said it will shed at least four-fifths of its 68% holdings in the consumer health JV to investors. GSK is keeping the remaining portion as “a short-term financial investment” but intends to cash out “in a timely manner” to strengthen its balance sheet and support pension funds, the company has said.

Similar to Pfizer, GSK is leaving consumer health to focus on novel drugs and vaccines, and it’s also been turning to M&A to replenish its pipeline.

Tuesday, GSK unveiled a deal to buy pneumococcal vaccine developer Affinivax for $2.1 billion, targeting none other than Pfizer’s megablockbuster Prevnar franchise. It followed a $1.9 billion deal unveiled in April for Sierra Oncology, which has a close-to-market JAK inhibitor.