GSK’s Respiratory Business Probable Spin-off
According to Axel Hoos (Head of Oncology, GSK), it is expected that GlaxoSmithKline may exit its Respiratory business and focus on more investment in its Oncology segment and R&D.
Withdrawing from its Respiratory business would still be an enormous change for GSK, as the company participated in this therapeutic domain back more than 40 years and succeeded to supply around a 33% of the world’s asthma and chronic obstructive pulmonary disease (COPD) medicines.
Much of GSK’s current success was made previously due to the combination therapies, which were first introduced in the late 1980s These combination therapies were concluded in its blockbuster Advair/Seretide (salmeterol/fluticasone propionate) product and has incurred more than $100bn in revenue since its first launch in 2001. However, sales of Advair are deteriorating due to its patent expiries in Europe and other world markets, and it is expected that to witness even less growth margin once generics become available in the US.
Advair’s decay in sales projects that GSK has a major dependency on latest respiratory products, which together grew 39% to £645 million but will still be way behind compensating for Advair’s declined revenue once generics will be introduced in the US. Moreover, the Respiratory Care domain is witnessing numerous drugs in the market, hence the competitive pressure is even more. GSK has high hopes for three-drug combination Trelegy (fluticasone furoate/umeclidinium/vilanterol). However, with third-quarter sales of £42 million, it is yet to cover a long way before it can be declared as a blockbuster drug.
On the other hand, the company is moving gradually towards oncology development, which is expected to reverse the backlog of GSK. The company is divesting since three years on a noteworthy number of oncology products, after it collaborated with Novartis over a $20 billion deal. GSK traded out some oncology assets for Novartis’ vaccine business and a joint share of an OTC consumer healthcare business. This particular business was acquired by Walmsley, earlier this year for $13 billion. Hence, it is expected that GSK is likely to sell off its Respiratory business and has a high probability to focus on other domains, for e.g. Oncology.
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– Victor Mukherjee,