Sector News

GlaxoSmithKline considers splitting up the group – FT

July 23, 2018
Life sciences

GlaxoSmithKline Plc is considering a break-up of the group after investors pressed the company’s board to spin off its consumer division, the Financial Times reported on Friday.

GSK Chairman Philip Hampton has been in discussions with the group’s biggest shareholders about the creation of a standalone pharma and vaccines company in the medium term, the FT reported, citing sources. The move could happen within two or three years, the report said.

One of the company’s top ten shareholders, whom the FT did not name, acknowledged having conversations with the GSK chairman, adding that shareholders “don’t quite believe in the company.”

Some investors have long called for the group’s break-up, arguing that it would crystallize value for component businesses and that there are limited synergies between consumer and pharma.

A GSK spokesman said the group’s priority is to improve the performance of its pharmaceutical business, especially research and development. The company is set to outline its new approach for the division next week.

The company’s “3 business structure” offers stability to its earnings and helps in free cash flow generation, the spokesman said in a statement.

“But as we have consistently said this is subject to each business continuing to perform competitively and having access to capital. We are pleased to have completed the buyout of the Consumer Healthcare business for which we see very good potential for growth and have set an increased margin target for that business to achieve by 2022,” according to the statement.

In April, GSK said it was divesting its rare disease gene therapy drugs to private biotech company Orchard Therapeutics.

Last year, GSK Chief Executive Emma Walmsley had announced a wide-ranging overhaul designed to narrow the focus of drug research and improve returns in the core pharmaceuticals business.

By Kanishka Singh and Ben Hirschler

Source: Reuters

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