It’s a busy week for GlaxoSmithKline, although much of it is related to the upcoming demerger of its Consumer Healthcare business. Here’s a look.
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It’s a busy week for GlaxoSmithKline, although much of it is related to the upcoming demerger of its Consumer Healthcare business. Here’s a look.
Investor Interest is Tepid to GSK’s Demerger Plan
Even though for years investors and analysts have wanted GlaxoSmithKline to break up, now that the company’s chief executive officer Emma Walmsley has outlined her plans to spin off at least an 80% stake in its consumer healthcare business, investors don’t appear enthused. A month since the Investor Update on June 23, company stocks have remained the same.
The consumer healthcare business is worth about a third of the combined group’s enterprise value and is a leader in the space internationally. One analyst with Seeking Alpha suggests that investors don’t necessarily believe the demerger will resolve what they view as longstanding issues at the company.
Activist investor Elliott Advisors wants Walmsley out and hasn’t kept that a secret. Elliott called on GSK’s board to appoint new non-executive directors with significant biopharma and consumer health expertise and “run robust processes for selecting the best executive leadership for ‘New GSK’ and consumer health, considering both internal and external candidates.”
The company also has a higher debt ratio than many of its fellow biopharma companies. The new consumer healthcare business would have a net debt to EBITDA ratio up to four times, stretching resources and limiting any potential merger-and-acquisition opportunities.
GSK Appoints Brian McNamara as CEO of Consumer Healthcare Spinoff
GSK’s board of directors appointed Brian McNamara to be the chief executive officer of the new GSK consumer healthcare spinoff. He is currently the chief executive officer of GSK Consumer Healthcare, a Joint Venture between GSK and Pfizer. The new company will include branded products such as Sensodyne, Voltaren, Panadol, and Centrum.
“We are delighted to announce Brian’s appointment to lead the proposed new Consumer Healthcare company, following a thorough process conducted by the board,” said Sir Jonathan Symonds, chairman of GSK. “Brian is an exceptional leader, and through two global integrations, has successfully transformed GSK Consumer Healthcare into a category-leading business. His strong track record of success and deep experience of fast-moving consumer goods and consumer health, proven at P&G, Novartis and GSK, means he is the right choice to unlock the potential of Consumer Healthcare as an independent company and deliver its strong prospects for sustainable sales and profit growth, high cash generation and attractive returns for shareholders.”
FDA Approves GSK’s Shingrix in Immunocompromised Adults
The U.S. Food and Drug Administration (FDA) approved GSK’s Shingrix (Zoster Vaccine Recombinant, Adjuvanted) for the prevention of shingles in adults 18 and older who are at increased risk of the disease from immunodeficiency or immunosuppression caused by known diseases or therapies.
The product is a non-live, recombinant, adjuvanted vaccine given intramuscularly in two doses, typically within six months of each other. The FDA originally approved it in 2017 to prevent shingles in people 50 years of age or older.
The approval was based on clinical trials in adults who had received an autologous hematopoietic stem cell transplant (auHSCT) or received treatment for blood cancers.
“We’re proud to offer Shingrix in the U.S. for the prevention of shingles in those who are immunocompromised, with FDA granting a broad indication for use in adults at increased risk of this disease,” said Thomas Breuer, chief medical officer, GSK Vaccines. “Older age and being immunocompromised are the most common risk factors for shingles disease.”
