GSK says separate consumer business is possible

The chief executive of GlaxoSmithKline has said that he is open to the idea of creating a breakaway consumer healthcare business, the FT reports.

 

Sir Andrew Witty said that a breakup of the group would be reasonable if a time came when a standalone consumer business offered more value.

 

He said that his current strategy for a cohesive business has the potential to lead to growth, particularly in light of the $20bn deal GSK secured with Novartis in April. The two companies have agreed to set up a joint venture in consumer healthcare. 

 

“Through our transaction with Novartis we are making all of our businesses stronger together and stronger as individual components. This will deliver enhanced value through the existing structure and it delivers enhanced optionality for the long run,” he said.

 

But he added that he was “willing to accept” that at some point a better option might be to separate the group into standalone businesses. 

 

He emphasised that such a move would not happen any time soon, since the relationship between pharmaceuticals and over-the-counter drugs created a strong incentive to maintain the business as one, particularly in emerging markets where the categories are especially fluid.

 

Britain's biggest drug-maker has faced a number of challenges recently, including last week's disheartening results for the second quarter. 

 

It has also been caught up in bribery scandals involving China, and more recently Syria, Poland, Jordan and Lebanon. Last year, Chinese authorities accused the company of bribing doctors to prescribe its products to patients.