GlaxoSmithKline plc (ADR) (NYSE:GSK) Would Consider Acquiring Pfizer Inc. (NYSE:PFE) Consumer Health Unit

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The chief executive officer of GlaxoSmithKline plc (ADR) (NYSE:GSK), Emma Walmsley, has said the pharmaceutical giant would consider acquiring the consumer health business of Pfizer Inc. (NYSE:PFE) in the event that the American firm decided to sell it.

“As a leader in consumer healthcare with a track record of very successful integration and as a consolidator in the sector…we would look at these assets carefully,” Walmsley said in a conference call.

Value of $10 billion

This comes after Pfizer indicated earlier in the month that it was considering either spinning off or selling its consumer-health unit. According to analysts the business could attract bids of over $10 billion. The consumer health business of Glaxo, which is one of the biggest in the world, generated $9.44 billion in revenues last year.

Two years ago the consumer health business of Glaxo was expanded when it was combined with the consumer health unit of Novartis AG. This was in a joint undertaking which is in the control of Glaxo. Under the deal Glaxo bought the vaccines business of Novartis while the Swiss firm bought the UK company’s marketed cancer drugs.

Consumer health products such as pharmacy staples which include over-the-counter painkillers and toothpaste are seen in some quarters as providing a hedge against risker activities like developing prescription drugs.

Prescription drugs

In Pfizer’s consumer health division some of the popular brands include ChapStick lip balms, Centrum vitamins and Advil pain killers. Pfizer has indicated that it could sell this unit in order to concentrate on prescription drugs. A decision will be made next year.

Besides Glaxo other pharmaceutical firms which are likely to show interest in the unit include drug companies which already have big consumer health units such as Sanofi SA and Johnson & Johnson. The list also includes consumer goods firms with an eye on a healthcare expansion including Reckitt Benckiser and Nestle.

Other than pursuing deals which could serve to bolster the consumer health division of Glaxo, Walmsley has indicated that the top priority of the pharmaceutical giant was to sharpen operations in its research and development department. Earlier in the year a couple of research programs were axed by Walmsley in order to concentrate on 4 key disease areas.

In Glaxo’s most recent quarterly report, the pharmaceutical giant recorded an increase in both profit and revenue in this year’s third quarter following a rise in the sale of consumer health products and prescription drugs. The sales growth was partly attributed to newer drugs such as Nucala.

On Wednesday shares of GlaxoSmithKline fell by 5.66% to close the day at $38.19.

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