GlaxoSmithKline drops plan to sell off older drugs business
By Ben Hirschler LONDON (Reuters) - GlaxoSmithKline said on Thursday it had decided not to sell a portfolio of older drugs marketed in North America and Europe after considering offers from potential buyers. "The company has evaluated all bids received and has concluded, consistent with its key criteria of maximising shareholder value, not to pursue divestment of these products," it said in a statement. A spokesman for GSK, which was being advised on the disposal by Lazard, declined to give any more details. People familiar with the situation said last month that several private equity firms and smaller drug companies were looking at the assets on the block, which had been expected to sell for more than $3 billion. Bidders, who had been hoping to clinch a deal before the end of the year, included Apollo Global Management, Denmark's Lundbeck, and KKR, which teamed up with private Dutch-based specialty drugmaker Norgine, sources said. The disposal of the older prescription drugs was one of several moves by Britain's biggest drugmaker to improve its long-term growth profile and reduce complexity. Some analysts, however, had questioned the timing of the sale since GSK is struggling with stagnant overall sales, putting pressure on its dividend, and divesting the mature drugs would have hit earnings in the short term. A number of large drugmakers have weighed similar plans to hive off older products, with mixed results. Sanofi ditched the idea of selling its mature drugs this year after the idea was opposed by the board, an episode that contributed to the downfall of its CEO. The drugs that GSK put on the block, known as established products, are expected to have combined 2014 sales of around 1 billion pounds($1.6 billion) but their sales are in long-term decline due to competition from cheaper generics. They included antidepressant Paxil, migraine treatment Imitrex, Zantac for stomach acid and Zofran for nausea. The company always intended to retain the rights to such products in emerging markets, where they are still growing. GSK Chief Executive Andrew Witty, who plans to close a major asset-swap deal with Novartis next year, is under pressure to deliver value to investors after a period of lacklustre performance. He put a floor under the company's dividend in October by pegging the 2015 payout to the 2014 level and aims to save 1 billion pounds in annual costs over three years, resulting in job losses. (Editing by Jane Merriman)
