GlaxoSmithKline (GSK) and Pfizer have agreed to merge their respective consumer business units, in a deal valued at £9.8B ($12.7B).
The UK-based company, GSK, has a notable portfolio of consumer brands, including Voltaren, Panadol, and Sensodyne, and will control a 68% stake in the combined business, while US-based Pfizer will control the remaining 32% and contribute major brands like Chapstick, Advil painkillers, and Centrum multivitamins. The deal will create the largest player in over-the-counter (OTC) products, with a leading offering in multiple sectors: pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health, and therapeutic oral health.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The deal is expected to close in H2 2019 and subsequently, after a 3-year period, GSK will separate the joint venture via a demerger. This will result in leaner structure for GSK, which will see its business focused only on two segments: pharmaceuticals and vaccines. Of note, this recent deal is in line with its new CEO’s strategy, who has recently divested its nutrition business.
A similar situation is expected for Pfizer. In recent years, the company has functioned under three main businesses: Innovative Medicines, Established Medicines, and Consumer Healthcare. However, it will now focus on the first two. The divestment of Pfizer’s Consumer Healthcare unit has been on the horizon for a while, but potential buyers such as Procter & Gamble and Reckitt Benckiser eventually pulled out.
Historically, GSK has been a diversified player, with a footprint in several healthcare businesses; in fact, GSK’s heritage is in the non-prescription market, as both companies GSK originally stemmed from—Wellcome and Beecham—began in consumer care. Similarly, Pfizer also has had a large consumer business for decades. However, this recent deal represents a shift in strategy for the two big pharma companies: by merging their non-core businesses, the companies will be able to have a more focused prescription pharmaceuticals business, and center investments in markets that provides higher margins.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
