Pfizer, Glaxo to Team Up

Pfizer Inc. and GlaxoSmithKline PLC plan to combine their consumer health-care units and eventually spin off the joint venture, creating the world’s largest seller of drugstore staples like Advil and Sensodyne toothpaste. The deal will free up both companies to concentrate on prescription medicines, which tend to be more profitable if also higher risk. The new business today could command a market valuation of about $42 billion, according to Mick Cooper, an analyst at Trinity Delta, a research house. Combined sales were $12.7 billion last year.

The joint venture represents an unexpected conclusion to a yearlong process by Pfizer to shed its consumer business, as it and other pharmaceutical companies focus on higher-margin prescription drugs. While Glaxo has shared that focus, the British drug maker had remained committed to its consumer business, which its chief executive led before her promotion to the top job last year.

Pfizer has been looking to offload its consumer healthcare business, saying last year that it might either sell the business outright or spin it off as a separately traded stock. Pfizer makes most of its billions from its core prescription drugs unit, which has produced the cholesterol medication Lyrica and erectile dysfunction pill Viagra.

This is GSK’s second major deal in a matter of weeks. It recently sold most of its India nutrition business, a portfolio that includes popular health drink brands Horlicks and Boost, to Unilever in a deal worth nearly $4 billion. The Glaxo-Pfizer joint venture will expand the global reach of the U.S. company’s consumer brands and buttress negotiations with major retailers, said Ashtyn Evans, an analyst at Edward Jones & Co.

For Pfizer, Wednesday’s deal represents a swan song for departing Chief Executive Ian Read, who tried selling the company’s consumer division outright but failed after pricing the business too high, according to people familiar with the matter. Under his tenure, Pfizer shed noncore businesses, notably its animal-health business, which is now an independent public company called Zoetis Inc.

Glaxo had been interested in Pfizer’s consumer division when it was on the block but walked away because it didn’t want to acquire the business outright, according to Ms. Walmsley. Instead, the U.K. company this year bought Novartis AG’s stake in the pair’s consumer health-care venture for $13 billion.


Todd “Bubba” Horwitz