Pfizer Inc. and GlaxoSmithKline plc have entered into an agreement to create a premier global consumer healthcare company with robust iconic brands.
The 2017 global sales for the combined business were approximately $12.7 billion. For the year ended December 31, 2017, the Pfizer Consumer Healthcare business recorded revenues of approximately $3.5 billion and the GSK Consumer Healthcare business recorded revenues of approximately $9.2 billion.
Under the terms of the transaction, Pfizer will receive a 32% equity stake in the joint venture. Pfizer will have the right to appoint three out of the nine members of the joint venture’s board.
As Pfizer will own less than 50% of the joint venture, Pfizer anticipates deconsolidating Pfizer Consumer Healthcare from its financial statements following the closing of the transaction. In the near- to medium-term, this deconsolidation is not expected to have a material impact on Pfizer’s top-line growth. In addition, given the Consumer Healthcare business records lower margins than Pfizer’s other businesses, the deconsolidation is expected to have a slight positive impact on Pfizer’s operating margins over the next several years.
The joint venture will be a category leader in pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health and therapeutic oral health and will be the largest global consumer healthcare business. In addition, the joint venture is expected to be the first or second largest consumer healthcare player in key geographies, including the United States, Europe, China, India and Australasia. The joint venture will operate globally under the GSK Consumer Healthcare name.