GSK buys Novartis stake in consumer health care venture for $13 billion

GlaxoSmithKline can be buying Novartis out of their consumer healthcare joint venture for $13 billion, taking full control of products including Sensodyne toothpaste, Panadol headache tablets, muscle gel Voltaren, as well as Nicotinell patches.

GSK’s biggest move since Emma Walmsley became chief executive last year follows the British drugmaker’s decision last week to quit the race to buy Pfizer’s consumer healthcare business, endangering an auction the U.S. company hoped would likely bring in as much as $20 billion.

Consumer remedies sold over the counter have lower margins than prescription drugs, however they are typically very well known as well as durable brands with loyal customers.

“The proposed transaction addresses one of our key capital allocation priorities as well as will allow GSK shareholders to capture the full value of one of the globe’s leading consumer healthcare businesses,” Walmsley said in a statement on Tuesday.

Although some pharmaceuticals groups have been keen to hold consumer care products, intense cost competition online, mainly coming from Amazon, as well as cheaper store-brand products, have led others to doubt their stable returns longer-term.

The British group’s shares jumped 6.3 percent, outperforming a 1.9 percent gain from the STOXX Europe 0 Health Care.

GSK said which as well as ending the Novartis venture which would likely start a strategic review of Horlicks as well as some other consumer nutrition products, sparking another potential industry shake-up. The review will include an assessment of its shareholding in its Indian subsidiary.

“which (the deal) also removes uncertainty as well as allows us to plan use of our capital for some other priorities, especially pharmaceuticals R&D,” Walmsley said, adding which the purchase would likely boost adjusted earnings as well as cash flows.

Pfizer has been struggling to sell its consumer healthcare business after GSK as well as Reckitt Benckiser both dropped out of the bidding, while differences in cost expectations have also hobbled German drugmaker Merck KGaA’s attempts to sell its consumer products unit.

as well as GSKs call for bids for its consumer healthcare nutrition brands – which has a regional focus on India – can be likely to detract attention coming from Merck’s asset, which relies heavily on sales of vitamins as well as dietary supplements in emerging markets.

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