Date
21 August 2017
GlaxoSmithKline chief executive Sir Andrew Witty is optimistic about the company's outlook, following a US$20 billion deal with Novartis in April. Photo: Bloomberg
GlaxoSmithKline chief executive Sir Andrew Witty is optimistic about the company's outlook, following a US$20 billion deal with Novartis in April. Photo: Bloomberg

GSK opens issue of spinning off consumer division

GlaxoSmith Kline may spin off its consumer healthcare business in the future if it offers more value as a standalone company, the Financial Times reported, citing remarks by the drugmaker’s chief executive.

Sir Andrew Witty stressed there are no such plans in the near term but, by raising it as a possibility, he indicated his openness to further restructuring in the company, the report said.

The drug giant issued a profit warning last week, but Sir Andrew remained optimistic about its outlook, following a US$20 billion deal with Novartis in April under which the two swapped a series of assets and agreed to set up a joint venture in consumer healthcare, according to the newspaper.

The joint venture would create one of the world’s biggest consumer healthcare businesses with annual sales of more than US$10 billion from brands such as Aquafresh toothpaste, Panadol painkillers and Nicotinell smoking cessation gum.

Set to be launched next year, the venture will be controlled by GSK, which will hold a 63.5 percent stake. Novartis has the right to sell its stake to GSK after three years.

Sir Andrew said there was a strong case for keeping the consumer business attached to the broader group because of synergies between pharmaceuticals and over-the-counter drugs, particularly in emerging markets where the categories are especially fluid, according to the newspaper.

However, he said he was “willing to accept” that there might come a point where it could be argued the businesses were more valuable as standalone entities, it added.

On bribery charges filed against the company’s officials in China, Sir Andrew said he has “zero tolerance” for corruption, adding that he will be glad if wrongdoings are brought to light so these could be stamped out.

New allegations of malpractice by GSK employees have emerged in connection with operations in Syria, adding to similar claims involving Iraq, Lebanon, Jordan and Poland, the report said.

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CG

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