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The CEO of GlaxoSmithKline’s consumer healthcare business expects that the newly spin-off company will trade in growth areas such as vitamins, and the time for integration in this area is ripe.
Before the highly anticipated Investor Day, Brian McNamara detailed the disagreements between GlaxoSmithKline’s pharmaceutical and consumer divisions. He told the Financial Times that despite its heavy debt, the business Will be able to conduct smaller transactions.
He said that the new company will be named in advance spin off Next year-will seek to sell more brands directly to consumers online, convert more prescription drugs into over-the-counter drugs, and expand in China.
“There will continue to be opportunities in the vitamin and mineral supplements of the product portfolio,” he said. “Many opportunities in this area are not large-scale acquisitions… I believe that if this makes sense for the business and provides the right return, we will be able to do so.”
After US hedge fund Elliott Management impressed investors on June 23, GlaxoSmithKline is under pressure Billions of pounds in shares Lobbying for change in the company. Some shareholders questioned whether Emma Walmsley, the chief executive of GlaxoSmithKline, who once led the consumer business, should lead the new pharmaceutical company as planned because they fear she will not be able to revive its business. Lacklustre channels.
The consumer healthcare business has brands such as Centrum vitamins and Sensodyne toothpaste. It is a joint venture with Pfizer. It was established at the end of 2018 and will be split in the summer of 2022.It also includes Novartis’ consumer healthcare business, after which GlaxoSmithKline acquisition The Swiss drugmaker withdrew from the joint venture in early 2018.
On Strategy Day, GlaxoSmithKline will tell investors how it plans to structure the spin-off, which some analysts said may make the consumer health business a target for acquisition. In 2020, revenue will increase by 4% to £10 billion, but the ratio of net debt to adjusted EBITDA will be 3.5 to 4 times.
McNamara said that the split will allow shareholders to benefit from the “upward” of the business. “Frankly speaking, separation means for us that we can operate as an independent company, we can develop our own strategy, our own capital allocation priorities,” he said. “This will not be a small company, it will appear somewhere in FTSE 10 to 20.”
He added that there are still opportunities for “integration” in the industry. According to data from Euromonitor, GlaxoSmithKline is the largest player in the consumer health dispersion industry, which includes products such as painkillers, vitamin and mineral supplements, cold medicines, and other drugs that can be purchased without a prescription, with market share Is 9.1%.
Its three major competitors are also pharmaceutical companies — Johnson & Johnson, Bayer, and Sanofi — but healthcare has always been a growth area for consumer products companies such as Reckless and Procter & Gamble.
Vitamins, minerals and supplements are particularly driven by the pandemic. GlaxoSmithKline reports that sales in 2020 have increased by 16% compared to the same period last year.
Multinational companies have been snapping up supplement brands, this year Nestlé agree Acquired the main brand of The Bountiful Company headquartered in the United States for US$5.75 billion, which produces Nature’s Bounty vitamins.
“This kind of consumer is interested and concerned about their personal health and well-being… It has indeed driven the amazing growth of vitamins, minerals and supplements,” McNamara said.
He added that after the company launched a ChapStick lip balm website in the United States last year, it was “considering multiple brands” and viewed direct sales as “an opportunity for sales and first-party data.”
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