GlaxoSmithKline Plc said its Alli diet pill and Lactacyd soap are among 19 consumer healthcare assets the U.K. drugmaker plans to sell this year as it focuses the unit on “priority brands.”
Abtei vitamins, FiberChoice diet supplements and the Nytol sleep aid also will be divested, said Glaxo, based near London, in an emailed statement.
“They are good products, most of them,” Navid Malik, a drug-industry analyst at Matrix Corporate Capital in London, said Thursday in a telephone interview. “It should be easy to find a home for them.”
The U.K.’s largest drugmaker said it wants its consumer health unit to focus on “fast-growing” brands such as Sensodyne toothpaste and the pain reliever Panadol. Glaxo hired Goldman Sachs Group Inc. to manage the sale, which was announced Feb. 3, a person with direct knowledge of the process said March 24. It could reap as much as 2 billion pounds ($3.3 billion), a second person said at the time.
Alli, Abtei and the other products for sale “have strong heritage and good prospects” while Glaxo “has lacked sufficient critical mass in some product categories and certain brands have lacked focus due to other global priorities,” the drugmaker said in its statement.
500 Million Pounds
The brands, mainly sold in Europe and the U.S., account for about 500 million pounds, or 10 percent, of Glaxo’s total revenue from consumer products. The drugmaker said it will start communicating with interested parties over the next few weeks. Glaxo confirmed that it aims to divest the products by late 2011, depending on interest from potential buyers.
Other drugmakers are shedding consumer-health assets they deem too small. French rival Sanofi-Aventis SA, based in Paris, is seeking a buyer for its U.S. dermatology business in a transaction that may fetch as much as 300 million euros ($434 million), two people with knowledge of the matter said.
The Alli diet pill contains orlistat, a chemical that blocks the intestines from absorbing fat when taken as many as three times a day with meals. Orlistat has been linked to reports of liver injury, prompting consumer advocacy groups to demand its removal from the market. The U.S. Food and Drug Administration announced new warnings on the pill’s label last year.
Public Citizen, a Washington-based consumer advocacy group, Thursday filed a petition with the FDA, asking the regulator to remove Alli from the market. The group said the products are associated with 47 cases of acute pancreatitis and 73 cases of kidney stones.
"Alli is safe and effective when used as directed," Glaxo said in an emailed statement. More than 40 million people have taken orlistat, including 10 million who have used Alli, and the drug’s safety has been established in studies involving more than 30,000 patients, the company said.
Sales of the over-the-counter weight-loss pill were 203 million pounds in 2009, the last year Glaxo reported revenue for individual consumer products. The company in February said sales of Alli in both the U.S. and Europe were lower in 2010. It didn’t elaborate.
Glaxo isn’t disappointed with its performance, David Mawdsley, a Glaxo spokesman, said in a telephone interview.
Alli “has been one of the most successful over-the-counter switches ever,” he said, referring to the shift from a prescription-only medicine to one available without seeing a doctor. The sale of the products, Alli included, “is all about focusing on brands and categories where we have most depth and can be a market leader.”
Glaxo’s decision to shed Alli came as “a surprise” to Matrix Corporate Capital’s Malik.
“I would have thought that might have been part of core business going forward, but clearly not,” Malik said. “It’s a bit of a disappointment.”
Glaxo plans to return funds it will raise from the sale of the brands to shareholders through further share buybacks or “another vehicle like a special dividend,” Chief Executive Officer Andrew Witty said in a Feb. 3 presentation to analysts.
The sale “is an example of our commitment to focus on realizing value and enhancing returns to shareholders,” the 46- year-old CEO said in Thursday’s statement.
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