Pharmaceuticals business GlaxoSmithKline (GSK) has joined forces with Pfizer to combine the two consumer health enterprises and create a new world-leading joint venture, designed to deliver stronger sales, earnings growth and cash flow through cost synergies, science-based innovation and leading power brands.
The portfolios of the two trusted consumer health brands will be brought together, including Advil, Caltrate, Centrum, Panadol, Voltaren and Sensodyne. The venture intends to be a category leader in vitamin and mineral supplements, pain relief, respiratory, digestive health, therapeutic oral health and skin health.
Chief executive officer at GSK Emma Walmsley explained that a year-and-a-half ago, she detailed clear priorities and a framework of capital allocation for the brand in order to improve its competitive performance over the long-term, as well as strengthening its ability to introduce breakthrough medicines and better products for healthcare to people all over the world.
“With our future intention to separate, the transaction also presents a clear pathway forward for GSK to create a new global pharmaceuticals/vaccines company, with an R&D approach focused on science related to the immune system, use of genetics and advanced technologies, and a new world-leading Consumer Healthcare company.
“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,” she went on to say.
It’s expected that this proposed transaction will realise serious cost synergies, predicted to generate total annual cost savings of £0.5 billion come the year 2022 for expected total cash costs of £0.9 billion and non-cash charges of £0.3 billion. The costs of integration are expected to be covered by planned divestments targeting approximately £1 billion of net proceeds.
GSK also recently announced that it will be acquiring TESARO, an oncology-focused company that has a major marketed product, Zejula (niraparib), which is an oral poly ADP ribose polymerase inhibitor that’s been approved for use in treating ovarian cancer. It is currently approved in the US and Europe for use on adult patients with recurrent ovarian cancer who are responding to platinum-based chemotherapy, irrespective of BRCA mutation or biomarker status.
In addition, GSK also recently announced a strategic collaboration with Kyowa Hakko Kiron for the future commercialization of daprodustat in Japan, an oral hypoxia-inducible factor prolyl hydroxylase inhibitor that is currently in phase three development by the pharmaceutical company for the treatment of anaemia associated with chronic kidney disease.
The agreement acknowledges the importance of bringing this new medication to people in Japan, as well as the global development and commercial expertise of GSK with the CKD expertise of Kyowa Hakko Kirin.
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