GlaxoSmithKline (GSK) plans to split into two businesses – one for prescription drugs and vaccines, the other for over-the-counter products – after forming a new joint venture with Pfizer's consumer health division.
The revamp is the boldest move yet by chief executive Emma Walmsley, who took over last year.
Walmsley has previously played down the idea of breaking up the group – something for which a number of investors have called over the years.
On Wednesday, however, Walmsley announced that GSK and Pfizer would combine their consumer health businesses in a joint venture with sales of £9.8 billion, 68% owned by the British company, in an all-equity transaction.
GSK noted that the deal laid the foundation for the creation of two new UK-based global companies focused on pharma/vaccines and consumer health care within three years of the transaction closing.
For Pfizer, the deal resolves the issue of what to do with its consumer health division, which includes Advil painkillers and Centrum vitamins, after an abortive attempt to sell it outright earlier this year.
The new joint venture with Pfizer is expected to generate total annual cost savings of £500 million by 2022, for expected total cash costs of £900 million and non-cash charges of £300 million.
GSK plans divestments of some £1 billion.
In a bid to reassure investors of its financial strength, GSK extended its guarantee on the dividend by noting that it expected to pay unchanged dividends of 80 pence per share for 2019.