Britain's GlaxoSmithKline is considering spinning off its consumer division in future, according to a report in the Financial Times, as part of a restructuring of the drugmaker. As Joanna Partridge reports, it comes after a damaging China bribery scandal, and shortly after a profit warning.
GlaxoSmithKline would consider spinning off its consumer healthcare division. That's the view of the British drugmaker's CEO. In an interview with the Financial Times Sir Andrew Witty said the split wasn't planned for the near future, but GSK might pursue it if the division had more value as a standalone company. It's not the only drugmaker to investigate this avenue, says Alastair McCaig from IG. SOUNDBITE: Alastair McCaig, Market analyst, IG, saying (English): "We just need to look at Reckitt Benckiser, they're further down the road of looking to do just this very same thing. I think for the time being though, it is worth remembering that the synergies in the emerging markets between the sort of pharmaceuticals and over-the-counter drugs business would warrant hanging on to things, the status quo as it is at the moment and I guess the focus of it for GSK really is with that $20 billion tie-up joint venture with Novartis." That asset swap was designed to bolster GSK and Novartis' best businesses and exit weaker ones. GSK's boss says he's optimistic about that deal. The past year has been turbulent for GSK. It's been rocked by damaging allegations of corruption in China since last July. And its shares suffered their worst drop since 2008 after a recent profit warning. SOUNDBITE: Alastair McCaig, Market analyst, IG, saying (English): "It's certainly creating quite a distraction, it's not just the Chinese bribery scandal that seems to be brewing, there seems to be one now more focussed in the euro zone, in the European arena, as it were, with Syria." Those allegations come from a whistleblower's letter that has been seen by Reuters. GSK says it's investigating the latest claims, which date back to 2010. Despite these challenges, Witty is pressing on with a restructuring of the drugmaker. The pharma sector has seen a flurry of activity in the past year. Michael Hewson is from CMC Markets. SOUNDBITE: Michael Hewson, Market analyst, CMC Markets, saying (English): "We've seen Astra Zeneca come into the eyes of Pfizer, as part of a tax inversion deal, obviously that's been rebuffed, we've got AbbVie and Shire, we've also seen a number of other deals come to the fore, the Allergan deal as well, so the pharmaceutical sector I think at the moment is ripe for consolidation." It doesn't look like that wave of M&A activity is coming to an end just yet.