GlaxoSmithKline is looking to divest some of its antibiotic medicines as part of refocus efforts at the British pharma company.
According to people familiar with the matter, the proposed sale of certain antibiotics will fuel an increased attention on the company’s core focus areas – including immuno-oncology.
The proposed divestment, reported initially by Bloomberg, consists of GSK’s cephalosporins franchise, including the Zinnat and Fortum brands. The sale of this portfolio of products is expected to rake in several hundred million US dollars, as the drugs make around $200m each year, according to Bloomberg.
The motivation for divestments such as this one is to concentrate efforts on new, more profitable products, although there is the downside of revenue loss and the cash flow that those older drugs provide.
On a conference call last month, GSK CEO Emma Walmsley said that the company’s “first priority remains… to invest in R&D and future growth drivers”.
GSK has already attempted to sell these brands, but failed to successfully do so, two years ago. Although the proposed sale is still in its early stages, the move would tie in nicely with the refocus efforts at the company.
Last month, GSK revealed that it is also reviewing its prescription dermatology business – which contributed just £450m to the company’s £33.8bn sales last year. GSK also sold of its 15 consumer brands to German pharma company Stada Arzneimittel AG for over €300m around the same time.
The Stada deal was just the latest in a string of divestments – in January GSK signed a deal worth up to €955m with Bavarian Nordic to offload its travel vaccines Rabipur and Encepur.
GSK gained the two vaccines as part of a $20bn asset swap with Novartis in 2015, which was orchestrated by previous GSK CEO Sir Andrew Witty. As a results, the company also handed over all its marketed cancer treatment.
Since the beginning of 2019, GSK and new CEO Walmsley have been trying to reverse that deal, with a high profile takeover of cancer specialist firm Tesaro at the end of 2018 and other deals, as well as in-house projects spearheading the effort.
As a result of the Tesaro deal, GSK gained the rights to PARP inhibitor treatment Zejula, a particularly important drug in the company’s growing oncology portfolio.
Although the PARP category is currently dominated by AstraZeneca and Merck partnered Lynparza (olaparib), Zejula has seen steady growth since its approval in March 2017.
By Lucy Parsons
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