Evolving GlaxoSmithKline Mulls Over More Unit IPOs

Published: Jan 16, 2015

Evolving GlaxoSmithKline Mulls Over More Unit IPOs
January 16, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

The chief executive of biopharma giant GlaxoSmithKline said Friday that is considering breaking up some of is its smaller component units by issuing partial public share offerings as it tries to give shareholders more bang for their buck, Reuters reported.

Chief Executive Andrew Witty also told Reuters that after a rough year during which Glaxo was fined $500 for bribing Chinese authorities, the company is not looking for any deals with a huge price tag, though smaller acquisitions would not be out of the question.

"Future M&A in the consumer space could get quite interesting again," he said.

As for IPOs, Witty said that in particular, Glaxo’s consumer health business would ideal spinout operation. That unit is in the middle of finishing up a $20 billion asset swap with Novartis that must still receive approve a stamp of approval from regulators—but could bring in a raft of new assets.

"Post-Novartis, particularly if we did more transactions in the consumer space, the idea of the consumer company being a standalone consumer powerhouse is much more tenable," Witty said.

But with the deal slated to close by the second quarter of 2015, Witty said Glaxo would probably hold off on any potential spinoff IPOs until the deal is officially done and dusted.

"It is pretty unlikely anything substantial can happen until after that point, so this is all very much in the world of strategic theory rather than tomorrow morning's press release," Witty said.

Glaxo already has a template in place for how a successful in-house IPO might go; it is currently planning the public market debuts of its HIV unit, ViiV Healthcare, which it announced in October.

All of these measures are ways for Witty to reassure shareholders that after a brutal 2014, Britain’s largest drugmaker is on track to return some value to the company via streamlining, acquisitions and a fleet of new drugs set to hit the market in 2015. As part of that effort, Glaxo will be cutting $1.5 billion in costs across its business model, while new chairman Philip Hampton is scheduled to take the helm in September.

Glaxo currently has 129 distinct pharmaceutical research milestones pending in 2015, ranging from first-in-man tests of new drugs to numerous clinical trial results to potential regulatory approvals,” said Reuters. Among those are the closely watched (and lucrative) vaccine candidates, which could eventually include products from the Novartis disease, such as a treatment for meningitis.

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