GSK sells off over-the-counter brands
pharmafile | December 22, 2011 | News story | Sales and Marketing | GSK, OTC
GlaxoSmithKline has offloaded a number of OTC consumer health brands in North America for £426 million in cash.
Flagged up in February it is believed to be part of a move by the firm to rid itself of its non-core products.
Prestige Brands Holdings is expected to take over the brands, which include BC, Goody’s, Beano, Ecotrin, Fiber Choice and Tagamet in the US and Canada, during the first half of next year.
GSK says the net cash proceeds from the deal – around £242 million (£145 million after tax) – will be returned to shareholders during 2012, with the pre-tax profit recorded in the accounts under ‘other operating income’.
“The disposal of our non-core consumer brands is about realising attractive value for shareholders as well as simplifying our ongoing consumer business and allowing it to focus on its priority brands and markets,” explains GSK chief financial officer Simon Dingemans.
GSK will now seek to consolidate its position in smoking control, denture care, dental sensitivity, analgesics and nutrition – with brands such as Sensodyne, Panadol and Horlicks.
“I am pleased that we have achieved such a good result for our US and Canadian assets, especially in such difficult market conditions,” Dingemans added.
The fall-out from GSK’s decision will see 130 jobs lost over the next three years at a facility in Waterford, Ireland, and the sale of US OTC production units in Tennessee and South Carolina.
US-based Prestige specialises in providing OTC healthcare and cleaning products to outlets such as drug stores and supermarkets.
Overall, the offloaded GSK products have annual sales totalling £500 million, and the manufacturer insists it is in ‘active discussions’ with other potential buyers for those which remain.
These include brands in Europe, as well as global rights for its OTC weight loss drug Alli (orlistat).
Alli was tipped to be a blockbuster at its launch in 2007, but failed to meet expectations, with sales of just £203 million in 2009.
It is a milder version of Roche’s prescription drug Xenical, and both forms of the drug have come under scrutiny for their safety profile due to the potential for severe liver injury.
Adam Hill
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