British consumer goods group Reckitt Benckiser Group has pulled out of discussions with Pfizer Inc over buying its consumer healthcare business, strengthening the hand of British drugmaker GlaxoSmithKline Plc.
Reckitt dropped out of the sale process late on Wednesday, the day before the U.S. drug company was expecting binding offers for the unit. Sources familiar with the matter said GSK was working on an offer.
Reckitt said its proposal had only been for part of the Pfizer business, without giving further details. One person familiar with the matter said the company had been most interested in acquiring the painkiller Advil.
It is also possible that Pfizer will receive more offers by Thursday’s deadline for bids, the sources added. Alternatively, the U.S. pharmaceuticals company might decide against a sale.
Pfizer has been hoping to fetch as much as $20 billion for its consumer health business, which includes familiar over-the-counter brands such as Advil, Centrum multivitamins, and Chapstick lip balm, according to the sources.
Durable Brands
Although consumer remedies sold over the counter have lower margins than prescription drugs, they are typically very well known and durable brands with loyal customers.
Pfizer said it was reviewing the future of the consumer business following the Reckitt decision.
“Pfizer continues to evaluate potential strategic alternatives for the consumer healthcare business, which include a spin-off, sale or other transaction, and Pfizer ultimately retaining the business. We have not yet made a decision, but continue to expect to make one in 2018,” Pfizer said in a statement.
For GSK, a deal to buy the consumer business would be the boldest move to date for new CEO Emma Walmsley, who took over last April. It would further increase the company’s leading position in consumer health, an increasingly lucrative sector as aging populations and health-conscious consumers drive demand for self-medication.
GlaxoSmithKline has struggled with a scarcity of promising new drugs in its pipeline at a time of mounting competition in its core respiratory and HIV divisions.
Adding Pfizer’s consumer healthcare business would likely boost GlaxoSmithKline’s earnings, given the economies of scale the enlarged business would enjoy, but would also stretch GlaxoSmithKline’s finances, analysts have said.
Source: REUTERS
