- British drugmaker GlaxoSmithKline plc will not seek to buy Pfizer Inc.'s consumer healthcare business, announcing Friday it has withdrawn from the process of bidding for the unit in a surprise to markets.
- "While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation," said GSK CEO Emma Walmsley in a March 23 statement.
- GSK appeared to be the leading contender to buy Pfizer's consumer division, particularly after rival Reckitt Benckiser Group plc quit the auction process. Investors, however, reacted positively to the news, sending shares in the pharma up 5% in trading on the New York Stock Exchange Friday.
Pfizer put its consumer business up for sale last October, announcing it would review strategic alternatives for the unit that includes major brands like Centrum, Advil and Chapstick.
GSK, one of the top consumer healthcare companies globally, was seen as a top contender to buy the unit, although some questioned whether the company could afford to pay the expected $20 billion price tag.
Global sales of Pfizer's consumer products totaled nearly $3.5 billion last year.
In February, Walmsley said GSK would seriously consider whether to bid for Pfizer's consumer business, but indicated it wasn't a move the company felt compelled to make.
"Our first priority remains pharma, both investing in the launches and the execution that we have underway but also, most specifically, prioritizing the pipeline within pharma," Walmsley said at the time.
Walmsley, who previously headed GSK's consumer unit before becoming CEO, has emphasized pharmaceuticals and taken steps to recharge the company's R&D efforts.
She also recruited Luke Miels from his post as head of AstraZeneca's European division, tasking him with forging GSK into a stronger competitor across its core therapeutic focuses.
In some irony, Walmsley's predecessor Andrew Witty came from a background in pharmaceuticals only to build up GSK's consumer arm with an aim to diversify revenues. That strategy culminated in a $20 billion asset swap with Novartis AG, by which GSK sent most of its oncology business to the Swiss pharma in return for consumer healthcare and vaccine assets.
Although it's not clear what prompted GSK to withdraw from the process, the decision to drop out leaves Pfizer searching for options. The pharma giant has said previously it may ultimately decide to spin-off or retain the business.
Last year, consumer healthcare sales totaled £7,750 (roughly $10 billion) for GSK, accounting for roughly 25% of the company's revenues. Operating profit margins for consumer products are much lower, however, averaging roughly 18% compared to 34% for pharmaceuticals and 32% for vaccines.
GSK expects low single-digit growth for the business in 2018.