British pharma company GlaxoSmithKline plc will assess its Indian consumer healthcare subsidiary as it looks to fund a $13-billion buyout of Novartis’ stake in their global consumer healthcare joint venture, the company said on Tuesday. This is part of a “strategic review” of consumer nutrition products that may include the sale of Horlicks, for which India is a big market.
It is not clear whether this assessment means that GSK plc would dilute its stake in the subsidiary, GSK Consumer Healthcare Ltd India. ET is awaiting responses to queries about this development.
“The strategic review will include an assessment of GSK’s 72.5 per cent shareholding in the company,” the company said in a global release about its acquisition from Novartis. GSK expects the outcome of the strategic review to be concluded around the end of 2018, but said there can be no assurance that the review process will result in any transaction.
Novartis has agreed to sell its 36.5% stake in its consumer healthcare joint venture with GSK in a deal that would enable the Swiss drug maker further focus on the development and growth of its core businesses.
“While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price,” said Vas Narasimhan, CEO of Novartis in a release on Tuesday.
“This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data,” he added.
The joint venture was formed in 2015 as part of Novartis’ portfolio transformation, which comprised a three-part inter-conditional transaction with GSK, including the combination of the Novartis Over-the-Counter (OTC) business with the GSK consumer healthcare business into the existing JV, Novartis stated.
“GSK is initiating a strategic review of Horlicks and its other consumer healthcare nutrition products to support funding of the transaction, and to drive increased focus on over the counter and oral health categories,” stated the release by GSK. The combined sales of these products were approximately £550 million in 2017, it added.
The majority of Horlicks and other nutrition products sales are generated in India, with the Horlicks range widely recognised as a portfolio of premium nutrition products, GSK added. In India, these products are sold by GlaxoSmithKline Consumer Healthcare Ltd, which is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
