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GSK and Novartis - Consumer Healthcare Collaboration

June, 2018

The British pharma giant GlaxoSmithKline has had a consumer health joint venture with Switzerland’s Novartis for the last few years. However, GSK has just struck a $13 billion deal with its partner to take control of the whole thing in March, 2018, after quitting the race to buy Pfizer's consumer healthcare business. Under the terms of the original transaction, Novartis has the right, exercisable from 2018 to 2035 to require GSK to purchase its stake in the Joint Venture. GSK's biggest move since Emma Walmsley became chief executive followed by the decision to buy Pfizer's consumer healthcare business, endangering an auction the U.S. company hoped would bring in as much as $20 billion. Initially, GSK had acquired Novartis' vaccines business and divested its marketed oncology portfolio to Novartis India in September, 2015.

gsk novartis products

This particular move from GSK addresses one of key capital allocation priorities and will allow GSK shareholders to capture the full value. Moreover, GSK is planning to start a strategic review of Horlicks and other consumer nutrition products, indicating another potential industry shake-up. The review will include an assessment of its majority stake in India-listed GlaxoSmithKline Consumer Healthcare. In India, these products are sold by GlaxoSmithKline Consumer Healthcare Ltd, a public company listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Although, many pharmaceutical companies are still holding consumer care products, but intense online price competition as well as cheaper store-brand products have led these companies to doubt their stable long term ROI.

India remains a priority market for GSK investment and growth. The Consumer Healthcare business will continue to invest in growth opportunities for its OTC and Oral Health brands, such as Sensodyne and Eno. The Group is also actively investing in its Pharmaceutical and Vaccines businesses, including building new manufacturing capacity in Vemgal, Karnataka and Nashik.

- Victor
Helathcare Market Research Analyst
Infoholic Research