Sector News

Sorry, Pfizer. GlaxoSmithKline doesn't want your OTC unit either

March 26, 2018
Life sciences

Earlier this week, Reckitt Benckiser gave GlaxoSmithKline an open shot at Pfizer’s up-for-sale OTC unit by withdrawing from deal talks. But that’s a shot GSK won’t be taking.

The British drugmaker, considered the leader in the race for the division, said Friday that it would drop out, too.

“While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation,” CEO Emma Walmsley said in a statement.

The move has some shareholders breathing a sigh of relief. One group of investors has worried about a big deal cutting into the company’s dividend, especially because Walmsley had refused to confirm that dividends would remain untouched if Glaxo went after the Pfizer asset. And another group never approved of GSK’s focus on low-margin consumer health in the first place.

GSK’s move increases the likelihood that Pfizer, which expects to decide this year on the unit’s fate, will hang on to the portfolio. It’s “tough to dance without a partner,” Credit Suisse analyst Vamil Divan, M.D., wrote in a Friday note to clients, noting that the company could also choose to spin the unit off.

The all-but-certain lack of a sale is an outcome at least one analyst predicted before GSK’s announcement Friday.

“There’s a low probability that they execute the transaction,” Suntrust analyst John Boris wrote in a note seen by Bloomberg, adding that, thanks to store-brand generic alternatives and online sales from retailers such as Amazon, the “brand cachet” of OTC products such as Pfizer’s Advil or Centrum “is being eroded.”

“The margins are there but the question is, are you going to be able to grow the franchise?” he wrote.

Pfizer’s price tag wasn’t low, either. The New York drugmaker had reportedly been attempting to drum up more than $20 billion, a figure that may have scared off former suitors Johnson & Johnson and Nestle, in addition to GSK and RB.

By Carly Helfand

Source: Fierce Pharma

comments closed

Related News

March 24, 2024

Johnson Matthey to sell its Medical Devices business for $700 million

Life sciences

Johnson Matthey Plc (JM; London) announced that it has signed a definitive agreement to sell 100% of its Medical Device Components business (MDC) to Montagu Private Equity (Montagu) for cash consideration of US$700 million (£550 million) on a cash free debt free basis.

March 24, 2024

Lonza acquires biologics manufacturing plant in California from Roche

Life sciences

Lonza AG (Basel, Switzerland) announced it has signed an agreement to acquire the Genentech large-scale biologics manufacturing site in Vacaville, Calif. from Roche (Basel, Switzerland) for $1.2 billion. The acquisition will significantly increase Lonza’s large-scale biologics manufacturing capacity.

March 24, 2024

Roquette to acquire IFF Pharma Solutions to boost global excipient presence

Life sciences

Roquette plans to acquire International Flavors & Fragrances (IFF) Pharma Solutions for an enterprise value of up to €2.85 billion (US$3.09 billion). With the acquisition set to close in the first half of 2025, the plant-based ingredient and pharmaceutical excipients supplier aims to reinforce its position in the pharmaceutical industry.

How can we help you?

We're easy to reach