GSK and Pfizer complete their joint venture

GSK and Pfizer complete their joint venture
Brian McNamara is chief executive officer of the joint venture

1 August 2019 - Deborah Wilkes

GlaxoSmithKline (GSK) and Pfizer have now completed the deal to combine their consumer healthcare businesses into a world-leading joint venture.

Announcing the deal in December 2018, GSK said the joint venture would have annual sales of around GBP9.8 billion (USD11.9 billion) (click here to read the News story).

The portfolio of consumer healthcare brands includes GSK's Sensodyne, Voltaren and Panadol, and Pfizer's Advil, Centrum and Caltrate.

GSK pointed out the joint venture was the "global leader in OTC products" and had "number one or two market share positions in all key geographies including the US and China".

The joint venture operates globally as GSK Consumer Healthcare and is led by chief executive officer Brian McNamara. GSK owns 68% of the joint venture with Pfizer holding the remaining 32%.

Paves the way for separation of GSK

GSK said the move paved the way for its separation into two new UK-based companies focused on Pharmaceuticals/Vaccines and Consumer Healthcare.

Within three years, GSK intends to separate the joint venture via a demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market.

Emma Walmsley, GSK's chief executive officer and chair of the joint venture, said: "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."

McNamara said the focus was now 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," added McNamara, "we are well-positioned to create a world-leading consumer healthcare business with stronger sales, cash flow and contribution to earnings."

Expected cost savings

GSK said integrating the two businesses was expected to produce annual cost savings of GBP0.5 billion by 2022 for expected total cash costs of GBP0.9 billion and non-cash charges of GBP0.3 billion.

"Up to 25% of the cost savings are intended to be reinvested in the business to support innovation and other growth opportunities," commented GSK.

Pfizer's Consumer Healthcare business reported worldwide sales up by 1% on an operational basis to USD862 million in the second quarter of 2019. A negative currency effect meant sales as reported were down by 3% (click here to read the News story).

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