Business World

Friday 20 September 2019

GlaxoSmithKline and Pfizer to merge healthcare divisions

(Stock image)
(Stock image)
Ellie Donnelly

Ellie Donnelly

GlaxoSmithKline (GSK) and Pfizer are to merge their healthcare divisions, creating a business with 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.

"The proposed all-equity transaction represents a compelling opportunity to build on the recent buyout of Novartis’ stake in GSK Consumer Healthcare, to create a new world-leading consumer healthcare business and to deliver further significant shareholder value," GSK said in a statement.

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 added that the transaction is expected to realise "substantial" cost synergies, with the partnership expected 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 20’s' by 2022.

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

"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."

Online Editors

Also in Business