December 5, 2014
By Mark Terry, BioSpace.com Breaking News Staff
U.K.-based GlaxoSmithKline , after a second quarter announcement that the company intended to sell off its portfolio of older medications, announced yesterday that it has changed direction and taken the drugs off the market.
In the June second quarter report, GSK wrote, “We continue to evaluate options to maximise the value of our established products. To this end, we have started a process to divest U.S. and European products in our Established Products Portfolio with total sales of around £1 billion. Subject to achieving appropriate shareholder value, we anticipate reaching agreement before the end of the year.”
The Dec. 4 statement wrote, “The Company has evaluated all bids received and has concluded, consistent with key criteria of maximising shareholder value, not to pursue divestment of these products.”
Reuters reported that a number of private equity firms and smaller drug companies were considering GSK’s portfolio. Bidders included Apollo Global Management, Denmark’s Lundbeck, and KKR, which had worked out a co-bid agreement with Dutch-based drug maker Norgine. Medicines included in the portfolio were Paxil, an antidepressant, Imitrex, for migraines, Zantac for acid reflux and Zofran for nausea.
The company’s financial reports indicate that its established portfolio’s sales declined by 14 percent for the first nine months of 2014. This was primarily due to competition from generics, which was only going to become more fierce as patents terminated.
As reported on October 22, GSK plans to undergo major restructuring over the next five years in hopes of cutting costs by £1 billion. In addition to the now-ended portfolio sales, GSK is considering selling off ViiV Healthcare, a standalone HIV treatment company.
GSK’s agreement with Novartis AG is continuing. In April 2014 GSK announced a 3-part inter-conditional deal with Novartis involving its Consumer Healthcare, Vaccines and Oncology businesses. The two companies plan to create a new Consumer Healthcare business with GSK holding majority control of 63.5 percent. GSK would acquires Novartis’ global Vaccines business, excluding its influenza vaccines, for an initial cash sum of $5.25 billion with additional potential milestones up to $1.8 billion and royalties.
In addition, GSK will unload is Oncology portfolio and related R&D activities, as well as rights to its AKT inhibitor. It will grant commercialization partner rights for future oncology products to Novartis for $16 billion. This deal is expected to wrap up in the first half of 2015.
Of the deal, Sir Andrew Witty, GSK chief executive, said in a statement, “This transactions strengthens GSK’s offering to patients and consumers. We will expand our portfolio to both help treat illness and prevent disease, and we will broaden our scope to improve human health with the acquired R&D and innovation expertise.”
