Member Article

GlaxoSmithKline sells cancer drugs business for $16 billion and creates new division

Drugs giant GlaxoSmithKline (GSK), which employs around 1,000 people at its Barnard Castle facility, has announced a series of major deals with Swiss pharmaceuticals firm Norvartis.

GSK will sell the rights to its cancer R&D business to Norvartis in a deal worth $16 billion, around $1.5 billion of which will be dependent on the success of ongoing trials.

The two companies have also revealed plans to set up a Consumer Healthcare business, majority controlled by GSK, that will market products in oral health, nutrition and skin health.

It is estimated the unit will generate revenues of £6.5 billion.

On top of this, GSK will acquire Novartis’ global Vaccines business for $5.25 billion with subsequent potential milestone payments of up to $1.8 billion and ongoing royalties.

As part of the deal GSK shareholders will share a payout worth £4 billion.

Sir Andrew Witty, CEO, GSK said: “This proposed 3-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings.

“Opportunities to build greater scale and combine high quality assets in Vaccines and Consumer Healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.

“The Novartis OTC (over-the-counter) portfolio is highly complementary to GSK’s and has many well-known, widely recommended brands such as Voltaren, Excedrin, Otrivin, and Theraflu. Together, we will create the world’s premier OTC business with clear opportunities to accelerate revenue growth.

“The acquisition of Novartis’ Vaccines business will significantly enhance the breadth of our vaccines portfolio and pipeline, notably in meningitis, with the addition of Bexsero, an exciting new vaccine for prevention of meningitis B. The acquisition will also strengthen our manufacturing network and reduce supply costs.

“The third part of this transaction would see divestment of our Oncology portfolio to Novartis. Over the last six years we have made excellent progress to develop a series of innovative medicines. This transaction provides us with a unique opportunity to crystallise an attractive value for this portfolio and allow these medicines to benefit from Novartis’ global scale in this area.”

This was posted in Bdaily's Members' News section by Tom Keighley .