GlaxoSmithKline consumer health joint venture with Pfizer begins

GlaxoSmithKline has completed a transaction with Pfizer to combine their consumer healthcare businesses into a “world-leading” joint venture, it said on Thursday.

The FTSE 100 pharmaceuticals giant said it had a controlling equity interest of 68%, with Pfizer holding an interest of 32% in the venture.

It said it would bring together two “highly complementary” portfolios of “trusted” consumer health brands, including GSK's Sensodyne, Voltaren and Panadol and Pfizer's Advil, Centrum and Caltrate.

GSK claimed it was the global leader in over-the-counter products, and had number one or two market share positions in all key geographies, including the US and China.

Following the announcement on Thursday, GSK said the joint venture would focus on completing the integration of the two businesses, which was expected to realise annual cost savings of £0.5bn by 2022, for expected total cash costs of £0.9bn and non-cash charges of £0.3bn.

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

“Now the deal has closed, our focus will be on completing the integration of these two businesses and leveraging their combined strength,” said GSK Consumer Healthcare chief executive officer Brian McNamara.

“With our portfolio of brilliant, science-based brands and strong talent and capabilities, we are well-positioned to create a world-leading consumer healthcare business with stronger sales, cash flow and contribution to earnings.”

As it had previously announced, GSK intended to demerge the joint venture from the company within three years, and to list the GSK Consumer Healthcare business on the UK equity market.

“The completion of the joint venture with Pfizer marks the beginning of the next phase of our transformation of GSK,” said Emma Walmsley, chief executive officer of GlaxoSmithKline and chair of the joint venture.

“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.”

GSK said that, while completion of the transaction with Pfizer had taken place, there were certain jurisdictions in which the transfer of relevant assets to or by GSK would only take place following the receipt of additional market-specific approvals or other matters relevant to those jurisdictions.

The arrangements in relation to those jurisdictions were considered “immaterial” in the context of the transaction.