GSK plans consumer health spinoff to strengthen focus on pharmaceuticals, vaccines

GlaxoSmithKline and Pfizer are pooling their resources together on over-the-counter medicines in a move that GSK intends to use to focus more on pharmaceuticals and vaccines.

London-based GSK said Wednesday it and New York-based Pfizer would form a joint venture to market OTC drugs with combined sales of $12.7 billion. With GSK owning a 68 percent stake in the venture, the British drugmaker said it was a step toward spinning out its consumer health division so that it can focus on prescription drugs and vaccines. A report in February by Research and Markets ranked GSK as the largest OTC drug manufacturer, while Germany’s Bayer was the second largest.

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In March, GSK bought out Switzerland-based Novartis’s 36.5 percent stake in the two companies’ consumer health JV for $13 billion. The company said the all-equity deal with Pfizer will allow it to build on the March deal with Novartis while also supporting its “key priority” of strengthening its pharmaceuticals business and investing in its research and development pipeline.

The plan is to separate the JV within three years of closing the Pfizer deal through a demerger of its equity interest, whereupon GSK Consumer Healthcare would be listed on the UK equity market.

“Ultimately, our goal is to create two exceptional, UK-based global companies, with appropriate capital structures, that are each well-positioned to deliver improving returns to shareholders and significant benefits to patients and consumers,” GSK CEO Emma Walmsley said in a statement. In remaking GSK as a pharmaceuticals and vaccines company, she said, the aim is to focus research and development on the immune system, use of genetics and other advanced technologies.

The drugmaker moved things in that direction earlier this month when it said it would $5.1 billion to acquire Waltham, Massachusetts-based Tesaro. The acquisition price, which at $75 per share represented a 110 percent premium over Tesaro’s 30-day volume-weighted average price of $35.67, was intended to beef up GSK’s oncology pipeline.