Walmsley responds to GSK spin-off rumours

Walmsley responds to GSK spin-off rumours
GlaxoSmithKline's Consumer Healthcare business contributed to the recent launch of the vaccine Shingrix in the US, says  chief executive officer Emma Walmsley

26 July 2018 - Deborah Wilkes

GlaxoSmithKline's board continues to believe that the company's current structure – based around Consumer Healthcare, Pharmaceuticals and Vaccines businesses – "offers significant opportunities in the current healthcare environment", according to chief executive officer Emma Walmsley.

Responding to recent press speculation that the board was considering spinning off Consumer Healthcare, Walmsley said the business also provided GlaxoSmithKline with "more stability in our earnings and helps in free cash flow generation".

However, Walmsley stressed that GlaxoSmithKline’s commitment depended on "each business continuing to perform competitively and having access to capital".

The Financial Times reported on 20 July 2018 that GlaxoSmithKline's chairman Philip Hampton was considering a spin-off following pressure from investors. Quoting "people familiar with his thinking", the Financial Times said Hampton had been "talking to the company's biggest shareholders about creating a standalone pharma and vaccines company in the medium term".

The speculation came soon after GlaxoSmithKline completed the buyout of Novartis' 36.5% stake in the consumer healthcare joint venture between the two companies for USD13.0 billion in cash (click here to read the News story).

Synergies between the three businesses

Announcing GlaxoSmithKline's financial results for the second quarter of 2018, Walmsley highlighted some of the synergies between the three businesses.

She pointed out, for example, that the recent US launch of Shingrix – the company's vaccine for preventing shingles in adults aged 50 and over – had been a consumer launch. Most of the product's distribution was through the retail environment in the US, she pointed out, noting that GlaxoSmithKline's Consumer Healthcare team had contributed to the launch.

Brian McNamara, chief executive officer of GlaxoSmithKline Consumer Healthcare, added that some people from Consumer Healthcare's marketing team had been transferred to the Pharmaceuticals business.

In the second quarter of 2018, worldwide sales at GlaxoSmithKline Consumer Healthcare increased by 3% at constant exchange rates to GBP1.83 billion (USD2.41 billion). Sales as reported were down by 1%.

The Consumer Healthcare business accounted for 25.0% of GlaxoSmithKline’s sales of GBP7.31 billion in the quarter, which were up by 4% at constant exchange rates but flat at actual exchange rates.

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