Pfizer-GSK j-v approved, Pfizer-Mylan to close mid-2020

otcinaction

At the end of last week, it was announced that GSK and Pfizer have closed their j-v, combining the groups’ respective consumer healthcare businesses to create the world’s largest CHC company. According to the latest MAT Q1 2019 data (see table below), this new entity – which will operate globally as GSK Consumer Healthcare – will become the standout No.1, increasing its global share from around 4% to roughly 7%, though of course divestitures will be necessary. Those already identified include ThermaCare (by the EU authorities) and Pfizer’s antacid tablet business (by the Brazil authorities), while some OTC brands (like Viagra Connect) will stay with Pfizer.

As previously announced, under the deal Pfizer owns a 32% equity stake in the j-v and GSK owns 68%. The combined company, which will be led by CEO Brian McNamara, will take leadership positions in pain relief, respiratory, VMS and therapeutic oral health. The new business will also hold the No.1 CHC spot in the USA and the No.2 position in China. As part of the agreement, Pfizer has appointed three of the nine members of the j-v’s board. GSK intends to separate the j-v as an independent company via a demerger of its equity interest to its shareholders and will list it on the UK equity market.

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In the same week, Pfizer announced plans to enter into a definitive agreement to combine Upjohn, its off-patented branded and generics business, with Mylan. The new company, which will be renamed and rebranded when the transaction closes (expected mid-2020), will expand the capabilities of both Mylan and Pfizer across 165+ markets. Mylan brings a diverse portfolio across many geographies and key therapeutic areas, while Upjohn brings iconic brands such as Lipitor, Celebrex and Viagra and leadership positions in China and other emerging markets.

The combination will drive a diverse portfolio of Rx medicines, complex generics, OTCs and biosimilars. It will be based in the USA and led by Mylan’s current Chairman Robert Coury, who will serve as Executive Chairman. Pfizer shareholders will own 57% of the new company and Mylan shareholders will own 43%. The new company is expected to have pro forma 2020 revenues of US$19bn-20bn.  

Commenting on the deal, Nicholas Hall said: “The new company will be a top CHC player, owing to Mylan’s 17th ranking, plus the Viagra Connect business and sundry other Pfizer CHC brands that didn’t go into the GSK j-v. That could well move NewCo into the Top 10. The questions in my mind are: will NewCo keep these assets or sell them on; and (more importantly) will it license out the rights to what is one of the best switch portfolios in the industry or manage the switches themselves.”

The evolving OTC market will be under the spotlight in our forthcoming report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Other chapters will include Healthcare Trends, Regulation, Digital engagement amongst many others. Nicholas will also unveil the 15 “Infinity Zones” he has identified as being crucial to the future growth of the industry. You can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to pre-order your copy, please contact melissa.lee@NicholasHall.com.

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