Pfizer is planning to open a data room that will allow GlaxoSmithKline and Reckitt to start due diligence for its consumer health business unit that is up for sale. The two are the only companies to have shown strong interest in acquiring the unit, after Sanofi, Nestle SA and Johnson and Johnson decided against bidding.
Glaxo and Reckitt were reportedly the only companies to hand in non-binding offers for the unit before February 1 2018. It has since emerged that concerns about the division’s stagnant sales and competition from the likes of Amazon on sales, could be the reason behind a lack of interest from some of the largest drug companies.
Sales for consumer products were little changed in the fourth quarter coming in at $950 million as full-year sales increased by 2% to $3.47 billion.
Pfizer is looking to fetch as much as $20 billion from the unit which boasts of popular brands such as Advil, a pain reliever, ChapStick, a lip balm and dietary supplement Centrum. A sell-off of the consumer health business unit will allow Pfizer to raise billions of dollars that it can use to pursue acquisitions as well as streamline its operations.
The company is also evaluating a number of options for the consumer business unit in addition to potential divestiture. Some of the touted options include full or partial separation of the unit through a spin-off or a sale or other transactions. According to the company’s spokeswoman, a decision on the matter will be reached before the end of the year.
Glaxo has shown strong interest in the Pfizer’s consumer business unit as it continues to explore ways of rejuvenating growth in its medicine pipeline. The company has come under immense pressure in the recent past, over slowing sales, a performance that has resulted in the replacement of 50-125 top managers as the company looks to bring in new ideas.
However, the company’s Chief Executive Officer, Emma Walmsley insists Pfizer’s business unit is not a top priority but would go a long way in complimenting the company’s operations.
Reckitt just like Glaxo has also come under pressure in recent months over a slump in sales. The acquisition of baby formula business Mead Johnson did not live up to expectations in terms of sales. It appears the company plans to rectify the situation with the acquisition of Pfizer’s consumer health business unit.