GlaxoSmithKline CEO Witty: Open To Consumer Spinoff But No Current Plans

GlaxoSmithKline’s (GSK) CEO Sir Andrew Witty recently sat down with the Financial Times and the discussion included some talk about the future of its consumer health business. Although Mr. Witty mentioned that he is open to the idea of a spinoff at some point, the company was not currently pursuing the idea. There has been some spinoff speculation with GSK in the past, but this seems to be the first time Mr. Witty is on record discussing the possibility regarding its consumer business. Glaxo has been shedding assets recently and one of its big moves included entry into a consumer focused JV with Novartis (NVS). As a result of the transaction, GSK has a majority stake (63.5%) in the ~$11b behemoth consumer health company which includes brands such as Aquafresh and Panadol.

Before getting too excited about the spinoff prospects, the FT did note that the CEO ‘stressed there was a strong case for keeping the consumer business attached to the broader group because of synergies between pharmaceuticals and over-the-counter drugs, particularly in emerging markets where the categories are especially fluid…however…he was “willing to accept” there might come a point where it could be argued the businesses were more valuable as standalone entitie’

GSK is currently dealing with a few other headaches, including a bribery probe in China and reduced profit forecasts, so it’s not surprising that the CEO is being asked about optimizing its assets. That is especially true given the flurry of deal activity taking place in the space right now, including M&A, asset sales and spinoffs. Nothing to do here right now, but it’s worth noting the ever so slight change in management’s tune.

Disclosure: Author holds no position in any stock mentioned.