GlaxoSmithKline Rumored to be Mulling $1.65B Bid for Partner Vectura

There are rumors that GlaxoSmithKline might make a $1.65 billion bid for UK-based Vectura. That seems like a very specific bit of speculation.

The Telegraph first reported the rumors, citing a possible bid of more than 175 per share, which would be a total bid of around 1.2 billion pounds, or $1.65 billion U.S.

Vectura focuses on devices and formulations for inhaled respiratory medications. Andrew McConaghie, writing for PharmaPhorum, notes, “The biotech firm’s share price fell nearly 40 percent over the course of 2017, largely because the FDA had rejected Vectura and Hikma’s generic version of Advair, but the companies now hope to resolve these problems in Q1 this year.”

GSK is partnered with Vectura already. GSK uses Vectura’s smart inhaler technology in its next-generation Ellipta respiratory products. But McConaghie points out that, although buying Vectura would bolster its respiratory franchise, Vectura has a lot of partnerships with GKS’s competitors. Vectura’s collaborations include Mundipharma, Bayer, and Novartis. They have also all been cited as potential buyers of Vectura.

McConaghie writes, “Its financial problems led Vectura’s chief executive James Ward-Lilley to announce a new business strategy in early January. He unveiled a shift in its focus towards lower risk development opportunities in high potential generics molecules in its pipeline. It will also end new investment in higher risk, novel molecules in early stage programs, and says it will look at opportunities to partner existing programs.”

And if there is an actual bid being planned, that would be a change for GSK as well. Under previous chief executive officer Sir Andrew Witty, the company conducted very little M&A activity. But the new chief executive officer Emma Walmsley is likely taking a different approach. Reportedly she is also considering acquiring Pfizer’s consumer health division, which might be up for sale toward the end of this year.

Pfizer has gone back and forth over the last year or so on whether to sell or spin off its consumer business, as well as whether to split up the company’s business units. The consumer business had sales of approximately $3.4 billion in 2016, so any sale would probably require GSK or anyone else to pony up about $15 billion.

“At this stage it would be weird if we didn’t look at it,” Walmsley said at the J.P. Morgan Healthcare Conference held last week in San Francisco. But she said it was very early and, “we don’t need it and we won’t overpay for it.”

Walmsley has a consumer products background, from when she ran L’Oreal. But she has also said that GSK’s top priority is its pharmaceuticals business and pharma research-and-development activities.

Pfizer’s consumer portfolio includes brands like Advil, Chapstick and Centrum vitamins. She pointed out that there aren’t many assets that would be completely complementary to GSK’s current consumer business, but Pfizer’s consumer business might be one of them. “If we did it,” Walmsley said, “it is cash generating.”