Monday 17 June 2019

GSK says it's 'too early' to assess jobs impact after Pfizer merger

Added value: GlaxoSmithKline CEO Emma Walmsley says the deal will be a boost for shareholders
Added value: GlaxoSmithKline CEO Emma Walmsley says the deal will be a boost for shareholders
Ellie Donnelly

Ellie Donnelly

GSK has said it is "far too early" to comment on the impact on Irish jobs of the merger of its healthcare division with Pfizer's.

Announcing the creation of the new consumer healthcare joint venture between the two companies, GSK said the deal is expected to close in the latter half of 2019.

"The separation is expected to take place within three years of this so we will have a lot of time to understand the implications, if any, for our sites in Ireland," a spokesperson for GSK said.

"Until then, it is very much business as usual and we will continue to keep our employees informed over the coming months and years as things progress."

GSK manufactures 90pc of the world's Panadol at its Dungarvan facility, where it employs around 750 staff.

The group has approximately 1,800 employees across Ireland.

The decision to merge its healthcare division with that of Pfizer's will separate GSK's pharma business from its consumer healthcare business.

Meanwhile, a spokesperson for Pfizer said that it does not manufacture any consumer products in Ireland, and that none of its workforce here will be impacted by the merger of the two divisions. Pfizer, which has been in Ireland since 1969, today employs 3,200 people across six locations in Cork, Dublin and Kildare.

To date, total capital invested by the company in Ireland exceeds $7bn (€6.2bn).

Under the joint venture the new business will have combined sales of £9.8bn (€10.9bn). GSK will have a controlling equity interest of 68pc, while Pfizer will have an equity interest of 32pc in the joint venture.

From GSK's perspective, the markets reacted positively to the news, with shares in the company trading up almost 7pc on the London Stock Exchange yesterday.

The combination of the two divisions will bring together two large portfolios of consumer health brands, which include GSK's Sensodyne, Voltaren and Panadol, and Pfizer's Advil, Centrum and Caltrate.

GSK said the transaction is expected to realise "substantial" cost synergies, with the partnership anticipated to generate total annual cost savings of £0.5bn by 2022 for expected total cash costs of £0.9bn and non-cash charges of £0.3bn.

Divestments targeting around £1bn in net proceeds will cover the costs of the integration.

Up to 25pc of the cost savings are intended to be reinvested in the business to support innovation and other growth opportunities. The joint venture will target an adjusted operating margin percentage in the 'mid-to-high 20s' by 2022.

"Through the combination of GSK and Pfizer's consumer healthcare businesses we will create substantial further value for shareholders," said GSK Group CEO Emma Walmsley.

"At the same time, incremental cashflows and visibility of the intended separation will help support GSK's future capital planning and further investment in our pharmaceuticals pipeline."

GSK Group delivered sales of £8.1bn in its third quarter this year. The group reported operating profit of £1.9bn over the three months.

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