GlaxoSmithKline (GSK) announced today that it has completed its transaction with Pfizer to combine their consumer healthcare businesses into a new global joint venture that will have combined sales of approximately £10bn and eventually be spun off into a separate company.
The deal, first announced back in December last year, brings together a complementary portfolio of consumer health brands, including GSK’s Sensodyne, Voltaren and Panadol and Pfizer’s Advil, Centrum and Caltrate. It is now the global leader in OTC products and has number 1 or 2 market share positions in all key geographies, including the US and China.
GSK stated it would now focus on completing the integration of the two businesses, which is expected to realise annual cost savings of £0.5bn by 2022 for expected total cash costs of £0.9bn and non-cash charges of £0.3bn. The JV plans to reinvest up to 25% of the cost saving in the business to “support innovation and other growth opportunities”.
Brian McNamara, Chief Executive Officer of GSK Consumer Healthcare, said: “Now the deal has closed, our focus will be on completing the integration of these two businesses and leveraging their combined strength. With our portfolio of brilliant, science-based brands and strong talent and capabilities, we are well-positioned to create a world-leading consumer healthcare business with stronger sales, cash flow and contribution to earnings.”
GSK reaffirmed that it plans to demerge the JV from the company within three years and to list the GSK Consumer Healthcare business on the UK equity market.
Emma Walmsley, Chief Executive Officer of GSK and Chair of the JV, commented: “The completion of the joint venture with Pfizer marks the beginning of the next phase of our transformation of GSK. This is an important moment for the Group, laying the foundation for two great companies, one in Pharmaceuticals and Vaccines and one in Consumer Health.”
NAM Implications:
- Time for a little reassessment of the emerging competitive landscape…
- …or would you prefer to wait and see how a new £10bn player impacts the market?
