Pfizer, GlaxoSmithKline to create powerhouse OTC drug business

Pfizer and GlaxoSmithKline plan to combine their consumer healthcare units in a venture to create the world's largest over-the-counter drug business, The Wall Street Journal reports.

The powerhouse business would become the largest seller of such drugstore basics as Advil, Tums and Sensodyne toothpaste.

The deal, announced Dec. 18, ends a yearlong process by Pfizer to spin off or sell its consumer healthcare division. The company and other drugmakers are looking to shift their focus to developing higher-revenue generating products.  

GlaxoSmithKline will hold a 68 percent stake, and Pfizer will hold the remaining 32 percent. The two pharma giants expect the deal to close in the second half of next year and plan to separate the joint venture within three years it being finalized.

In 2017, GlaxoSmithKline and Pfizer's consumer healthcare units generated combined sales of $12.7 billion.

The plan to shed the joint venture within three years will break apart GlaxoSmithKline, which generates about a quarter of its revenue from consumer products, whereas Pfizer's consumer products bring in about 7 percent of total revenue.

Both companies said the move will allow them to cut costs and boost cash flow to invest in a pipeline of new medicine. By combining, the companies expect savings of about $570 million a year by 2022.

"It became obvious that for both parties there was tremendous value creation opportunity here in an all-equity transaction, and that was the real difference versus where we were earlier in the year," said GlaxoSmithKline CEO Emma Walmsley.

More articles on pharmacy:
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Kroger launches discount program for out-of-pocket prescription drugs

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