Novartis: ‘Time is right’ for $13bn consumer health sale to GSK

By Dan Stanton contact

- Last updated on GMT

Novartis will sell its stake in a consumer healthcare joint venture to partner GSK and plans to invest the $13bn into its core pharmaceutical businesses.

As part of an asset exchange in 2014​, Novartis and GlaxoSmithKline (GSK) combined their over-the-counter (OTC) drugs and nutritional supplements businesses to form a consumer health joint venture.

Four years on, GSK has agreed to pay $13bn (€10.5bn) to buyout Novartis’s 36.5% stake in the venture, allowing the Swiss pharma giant to concentrate on its core business.

While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at a fair and attractive price,”​ Novartis spokesperson Antonio Ligi told this publication.

“This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data.”

He added: “The integration of the OTC JV has been completed and the majority of synergies have been realized as per the JV business plan.”

The unit – which includes OTCs such as its pain relief products Panadol, Voltaren and Excedrin – has been growing since 2014 at 4% on a three year CAGR basis, with reported sales of £7.8bn ($11bn) in 2017.

According to GSK CEO Emma Walmsley, the acquisition “will allow GSK shareholders to capture the full value of one of the world’s leading Consumer Healthcare businesses.”

It also gives the UK-based firm certainty for future planning as under terms of the JV, Novartis had the right to require GSK to purchase its stake anytime from March 2018 to March 2035.

Yesterday​, we reported GSK walked away from a potential acquisition of Pfizer’s consumer healthcare business days after Reckitt Benckiser pulled out of a deal reportedly worth $20bn.

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