According to a March 2 report by PMlive, British pharmaceutical company GlaxoSmithKline (GSK) plans to divest part of its antibiotics business. According to insiders, the purpose of GSK's asset divestiture is to focus on core businesses, including oncology immunotherapy.
According to Bloomberg, the assets GSK plans to divest are the franchise rights for cephalosporin prescription drugs, including Zinnat and Fortum. Given that these drugs generate approximately $200 million in annual revenue for GSK, Bloomberg expects the sale to bring the company hundreds of millions of dollars in proceeds.
GSK’s decision to divest its antibiotics business was driven in part by declining revenues and cash flows from these legacy drugs, as the company seeks to focus its primary efforts on higher-margin innovative products.
During a conference call in February, GSK CEO Emma Walmsley stated, “The company’s top priority remains investing in the development of products with future growth potential.”
In fact, GSK had already attempted to sell these antibiotic brand products two years ago, but the effort was unsuccessful at that time. Although the current divestiture proposal is still in its early stages, it undoubtedly aligns with GSK’s strategic adjustment plan.
According to GSK’s official announcement, the company also evaluated its dermatology prescription drug business in February. This segment generated £450 million in revenue for GSK in 2019. Additionally, GSK sold 15 of its consumer healthcare brands to the German pharmaceutical company Stada Arzneimittel AG for over €300 million.
The aforementioned transaction is merely the latest in a series of asset divestitures by GSK. In January this year, GSK signed an agreement with Bavarian Nordic for a deal valued at up to €955 million to sell its rabies vaccine Rabipur and its tick-borne encephalitis vaccine Encepur. These two vaccines were acquired by GSK as part of the $20 billion asset swap with Novartis in 2015. In this major transaction, spearheaded by GSK’s former CEO Andrew Witty, GSK also divested all of its marketed oncology drugs.
Since 2019, GSK’s new CEO, Emma Walmsley, has been working to reverse the negative impact of this transaction and steer GSK back into the oncology arena. In late 2018, GSK made a high-profile acquisition of the cancer treatment company Tesaro. Through this deal, GSK secured ownership of the PARP inhibitor Zejula.
Although the PARP inhibitor market is currently dominated by Lynparza (olaparib), co-developed by AstraZeneca and Merck & Co., Zejula, which was approved for marketing in March 2017, has seen steady sales growth in recent years, with sales revenue reaching $293 million in 2019.