GSK
starts unloading older meds by region, with $3B portfolio up for grabs
Earlier this year,
GlaxoSmithKline ($GSK) announced that it would sell off some of its older drugs
to help revive profits and slim down a sagging portfolio. Now, the company is
planning to put $3 billion worth of those older medications on the chopping
block, shedding products by geographical region.
GSK will take bids next
month for the aging products and will likely sell off-patent meds marketed in
North America and Europe, Reuters sources say. Companies such as Lundbeck and
Lupin were listed as potential bidders, along with the private equity firm KKR.
Brands up for sale include the antidepressant Paxil, migraine treatment
Imitrex, stomach acid-reducer Zantac and nausea fighter Zofran. They're
expected to have combined 2014 sales of around £1 billion ($1.6 billion) but
face competition from cheap generics.
The company's plan to hive
off the products by region reflects buyers' interest, as Denmark's Lundbeck and
India's Lupin are both seeking to expand in the U.S. Private equity firms are
said to be looking at specific products. It's unlikely that any bidders will
walk away with the entire portfolio, Reuters reports.
GSK plans to hold onto
rights for the drugs in emerging markets, where demand for the products is
still growing.
The sale comes at a
critical moment for drugmakers like Lundbeck that face patent expirations for
some of their top-selling products, Sydbank analyst Soren Lontoft Hansen told
Reuters. "There's a giant potential on the U.S. market. It makes sense to
use the existing sales force to take on a few more drugs. So it will probably
be some drugs that complement some of Lundbeck's existing drugs," Hansen
said.
A sale could also yield
more immediate returns for GSK, as the company waits to complete its three-part
deal to sell and combine assets with Novartis ($NVS). In April, the drugmakers
said they would swap business units--with Glaxo's oncology business going to
Novartis and the latter's vaccines unit to GSK--and set up a consumer health
joint venture to market over-the-counter products with an estimated $11 billion
in sales, under the name GSK Consumer Healthcare. The companies expect to close
the multipart deal sometime early next year, the companies said when the deal
was announced.
GSK is not the only Big
Pharma player shopping a portfolio of older products. Abbott Laboratories
($ABT) recently sold off many of its older products to Mylan ($MYL) in a $5.3
billion deal, and Merck ($MRK) and Sanofi ($SNY) are also looking to lighten
their loads. But Sanofi's plans to sell were said to be stalled earlier this
month, as top-level management could not agree on how to move forward with the
deal.
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