Britain's GSK has unveiled a detailed plan to spin off its consumer healthcare venture with Pfizer into a separate company by the middle of next year, as the pharmaceutical giant sharpens its focus on prescription medicines and vaccines.
The separation will be achieved by demerging at least 80% of GSK's current 68% shareholding in the Consumer Healthcare business to GSK shareholders, with the shares in the new entity to list on the London Stock Exchange.
The demerger planned for the middle of next year will allow GSK to focus on strengthening its core drugs business, which has been hit by a lack of fast-growing products and patients deferring treatments due to the COVID-19 pandemic.
Sales Growth Target
New GSK, the pharmaceuticals business being separated from its consumer health operations, pledged to increase sales by more than 5% a year to 2026, the group added, as it published details of the split.
Investors have been waiting for details of the separation, which was first unveiled in December 2018 when GSK agreed a joint venture for consumer brands such as Sensodyne toothpaste and Advil painkillers with Pfizer.
Despite being the world's biggest vaccines maker, GSK has also been beaten by the likes of Pfizer, Moderna and AstraZeneca to making a COVID-19 vaccine.
GSK is currently valued at about 10.3 times its forecast core earnings, including net debt, below an average of more than 12 for global pharma majors, Refinitiv Eikon data shows. GSK's share price has fallen about 14% over the past 12 months.
At an investor day outlining its plans, GSK said the pharmaceuticals arm was expected to receive a dividend of up to £8 billion ($11 billion) from the consumer business.
As expected, the consumer arm will also take on a higher share of debt and the combined dividend of the two businesses will be reduced.
That should help to give the pharmaceuticals business in particular more scope to invest in drug development and deals.
GSK chief executive, Emma Walmsley plans to stay on as leader of the company after it splits from its consumer healthcare business next year.
"My focus is resolutely on leading us through this transformation, through a successful separation, and with momentum beyond that," Walmsley told a news briefing when asked about her future.