The head of GSK’s consumer health business expects the newly separated company to do business in growth areas such as vitamins in a sector mature for consolidation.
Speaking ahead of a much-anticipated investor day detailing the split between GSK’s pharmaceutical division and consumer divisions, Brian McNamara told the Financial Times that the business could make smaller deals, despite the fact that it is debt.
He said the new company – which will be called soon a spin-off next year – it will seek to sell more brands online directly to consumers, convert more prescription drugs into over-the-counter purchases, and expand into China.
“This side of vitamin mineral supplementation of the portfolio continues to have opportunities,” he said. “Many opportunities in this space are not massive acquisitions… I think we would have the ability to do that if it made sense for the company and provided the right return.”
GSK is under pressure to impress investors on June 23 after US hedge fund Elliott Management took a billions of pounds in the company to press for change. Some shareholders have expressed doubts about whether Emma Walmsley, CEO of GSK who previously led the consumer business, should lead the new pharmaceutical company as planned, as they are worried she will not be able to revive the business. I know missing pipeline.
The consumer health company, which owns brands such as Vitamin Centrum and Sensodyne toothpaste, is a joint venture with Pfizer, formed in late 2018 and expected to be rolled out by summer 2022. It also includes activities health care for Novartis consumers, later GSK bought it the Swiss pharmacist out of a joint venture first in 2018.
On the day of the strategy, GSK will tell investors how it plans to structure the spinout, which some analysts said could make consumer health activity a target for the acquisition itself. By 2020, revenues will grow by 4 per cent to £ 10bn, but it will have a net debt on earnings adjusted before interest, taxes, amortization and amortization of 3.5 to 4 times.
McNamara said the split would allow shareholders to profit from the “upside” in the deal. “Frankly, separation for us means we can operate as an independent company, we can define our own strategy, our capital allocation priorities,” he said. “This isn’t going to be a small company, it’s going to be somewhere in the FTSE 10 to 20.”
He added that there was always an opportunity for “consolidation” in the sector. GSK is the largest participant in the fragmented consumer health industry – which includes products such as analgesics, vitamin and mineral supplements, cold remedies and other over-the-counter drugs – with 9.1 percent of the market, according to Euromonitor.
Its three biggest rivals are also pharmaceutical companies – Johnson & Johnson, Bayer and Sanofi – but healthcare has been a growth zone for consumer goods companies such as Reckitt Benckiser and Procter & Gamble.
Vitamins, minerals and supplements have received a particular boost from the pandemic, with GSK reporting a 16 percent increase in sales in 2020 compared to a year earlier.
Multinationals have taken supplement brands, with Nestlé this year I agree to buy the major brands of The Bountiful Company, based in the United States, which makes Nature’s Bounty vitamins, for $ 5.75 billion.
“The consumer has an interest in their personal health and well-being, and they care about it.” . it has really led to incredible growth in minerals and vitamin supplements, ”McNamara said.
He added that the company was “looking at several brands” that could sell directly to consumers after launching an American website for ChapStick lip balm last year, seeing direct sales as “an opportunity in sales and in first-party data “.