Watfordhornet
27 Mar 2018
Re: Blinder or blunder? Surely lower risk as GSK will know all about what they are buying, synergies available, Background IT systems/issues etc so would suggest a good deal vs a more expensive Pfizer deal
Lupo di mare
27 Mar 2018
Re: Blinder or blunder? "Barclays analysts said Glaxo was paying less than 17 times expected 2018 core earnings for the joint venture stake, while sources have told Reuters that both Merck and Pfizer had asked for up to 20 times for their respective assets."
Lupo di mare
27 Mar 2018
Re: Blinder or blunder? Maybe we'll get a better steer after the phone-in."An analyst/investor teleconference will be held today at 2pm BST"
Lupo di mare
27 Mar 2018
Re: Blinder or blunder? Good question, games. Struggled to find anything definite that I could understand, but here's a bit.Non-controlling interest allocation of CHC profits - £344m, but the waters are muddied by:-"At 31 December 2017, the estimated present value of the potential redemption amount of the Consumer Healthcare Joint Venture put option recognised in Other payables in Current liabilities was £8,606 million (31 December 2016: £7,420 million reported within Other non-current liabilities). The estimated present value of the potential redemption amount of the Pfizer put option related to ViiV Healthcare, also recorded in Other payables in Current liabilities, was £1,304 million (31 December 2016: £1,319 million). Contingent consideration amounted to £6,172 million at 31 December 2017 (31 December 2016: £5,896 million), of which £5,542 million (31 December 2016: £5,304 million) represented the estimated present value of amounts payable to Shionogi relating to ViiV Healthcare and £584 million (31 December 2016: £545 million) represented the estimated present value of contingent consideration payable to Novartis related to the Vaccines acquisition. A milestone payment of $450 million related to this latter liability was made in January 2018. The liability due to Shionogi included £216 million in respect of preferential dividends. The liability for preferential dividends due to Pfizer at 31 December 2017 was £17 million (31 December 2016: £23 million). An explanation of the accounting for the non-controlling interests in ViiV Healthcare is set out on page 59. Of the contingent consideration payable (on a post-tax basis) at 31 December 2017, £1,076 million (31 December 2016: £561 million) is expected to be paid within one year. The consideration payable for the acquisition of the Shionogi-ViiV Healthcare joint venture and the Novartis Vaccines business is expected to be paid over a number of years. As a result, the total estimated liabilities are discounted to their present values, on a post-tax basis using post-tax discount rates. The Shionogi-ViiV Healthcare contingent consideration liability is discounted at 8.5% and the Novartis Vaccines contingent consideration liability is discounted partly at 8% and partly at 9%."
Hydrogen Economy
27 Mar 2018
Re: Blinder or blunder? Last year, reported sales of £7.8bn at operating margins 17.7% - Op Profit £1.38 Bn36.5% of that - £0.504 Bn. 36.5% stake in their consumer healthcare joint venture for $13bn (9.15 Bn GBP).ie 18 x OPERATING profit.The business expects operating margins to approach 'mid-20's' percentages by 2022 at 2017 on a constant exchange rate basis. CAGR was 4%. Implies the 36.5% share could yield £0.83 Bn operating profit in 2022. ie. 12.3x 2022 Op Profit.Looks pretty pricey, but market seems happy.H2
gamesinvestor
27 Mar 2018
Re: Blinder or blunder? $13Bn for 36.5% stake.What was the turnover and profit of the joint venture?Be interesting to understand the valuation Emma paid and if it really makes sense.Games
Lupo di mare
27 Mar 2018
Re: Blinder or blunder? Makes sense to me, too. Ok, they were obliged to something with it, but they've taken it all back under control. Do I recall him of fund management fame saying that GSK should have gotten rid of it? Good steady earnings growth with less R&D costs - why not.Missed the bit about maintaining the divi, but if they can sort out India, that might not be an issue. Horlicks in India! I mean, if you can sell Horlicks in India you can sell anything anywhere. Ice cream to Eskimos?
sound money
27 Mar 2018
Re: Blinder or blunder?
sound money
27 Mar 2018
Re: Blinder or blunder? Well there's a suprise.Emma's played a blinder. Who would have seen that one coming.
lossmaker2
27 Mar 2018
Re: Blinder or blunder? Emma played her hand very well, nice feint on the Pfizer auction process.Bodes well going forward!
lossmaker2
27 Mar 2018
Blinder or blunder? will be interesting to see the opening price to ascertain what the market thinks of this deal!
IOMINVESTCOM
27 Mar 2018
Re: Novartis to sell stake in consumer healt... LONDON (Alliance News) - GlaxoSmithKline PLC said Tuesday it will acquire Novartis's 36.5% stake in their consumer healthcare joint venture for USD13 billion, or around GBP9.2 billion.The UK listed pharmaceutical giant also said it will initiate a strategic review of Horlicks and other consumer nutrition products to support funding of the stake acquisition. The review will include the company's 72.5% shareholding in Indian subsidiary, GlaxoSmithKline Consumer Healthcare Ltd.The consumer healthcare joint venture was formed as part of the three-part transaction between Glaxo and Novartis which was approved by shareholders in 2014.Glaxo said its consumer healthcare business is well positioned to deliver sales growth, operating margin improvements and attractive returns. Last year, Glaxo's consumer healthcare business reported sales of GBP7.8 billionThe stake acquisition is expected to be accretive to Glaxo's adjusted earnings in 2018 and thereafter, and is expected to strengthen operational cash flows."The proposed transaction addresses one of our key capital allocation priorities and will allow GSK shareholders to capture the full value of one of the world’s leading consumer healthcare businesses. For the group, the transaction is expected to benefit adjusted earnings and cash flows, helping us accelerate efforts to improve performance. Most importantly it also removes uncertainty and allows us to plan use of our capital for other priorities, especially pharmaceuticals R&D [research and development]," Glaxo Chief Executive Emma Walmsley said.The stake acquisition by Glaxo is expected to close in the the second quarter, according to Novartis. Glaxo expects the strategic review to conclude by the end of 2018. Combined sales of nutrition products totaled GBP550 million in 2017.Glaxo shares on Monday closed at 1,288.20 pence.Tapan Panchal; [email protected]
IOMINVESTCOM
27 Mar 2018
Novartis to sell stake in consumer healthcare joint venture to GSK for USD13.0 billion Novartis to sell stake in consumer healthcare joint venture to GSK for USD13.0 billion to focus on strategic priorities27/03/2018 6
0amGlobeNewswireNovartis International AG / Novartis to sell stake in consumer healthcare joint venture to GSK for USD13.0 billion to focus on strategic priorities . Processed and transmitted by Nasdaq Corporate Solutions. The issuer is solely responsible for the content of this announcement.Price reflects an attractive value to Novartis Proceeds to be used according to capital allocation priorities, including bolt-on acquisitions Sale of JV in a non-core segment in best long-term interests of Novartis shareholders Completion expected in Q2 2018, subject to necessary approvalsBasel, March 27, 2018 - Novartis announced today that it has entered into an agreement with GlaxoSmithKline plc (GSK) to divest its 36.5 percent stake in its consumer healthcare joint venture (JV) to GSK for USD13.0 billion. The sale will enable Novartis to further focus on the development and growth of its core businesses.Vas Narasimhan, CEO of Novartis, said: "While our consumer healthcare joint venture with GSK is progressing well, the time is right for Novartis to divest a non-core asset at an attractive price. This will strengthen our ability to allocate capital to grow our core businesses, drive shareholder returns, and execute value creating bolt-on acquisitions as we continue to build the leading medicines company, powered by digital and data."The joint venture was formed in 2015 as part of Novartis' portfolio transformation, which comprised a three-part inter-conditional transaction with GSK, including the combination of the Novartis Over-the-Counter (OTC) business with the GSK consumer healthcare business into the existing JV.The consumer healthcare JV investment is accounted for in Novartis' financial reporting using the equity method of accounting, whereby the Company's share of the net income is reported as income from associated companies.Deal termsGSK has agreed to pay a cash consideration of USD13.0 billion for Novartis' stake in the consumer healthcare joint venture.The valuation, which was agreed by both parties, reflects the significant value created by the JV under the guidance of the joint JV Board and management team.Four of the 11 directors of the joint JV Board are appointed by Novartis. They will step down in connection with the completion of the transaction.The transaction is subject to GSK shareholder approval. Proceeds in cash are expected to be received once all closing conditions are fulfilled. [link]
Hydrogen Economy
26 Mar 2018
Re: Glaxo CEO Dispenses Bitter Pill to Fix R... IOM, thanks for sharing this "Ms. Walmsley has replaced nearly half of Glaxo's top 125 executives, according to the company. She has reassigned or let go some 400 scientists in its drug-development unit, and another 100 science jobs are still on the line, according to people familiar with the matter. She is also shutting down more than two dozen clinical drug trials, as she narrows the focus of Glaxo's drug-discovery portfolio."That sounds like a heck of a lot of bathwater being thrown out, hopefully not too many babies in there! I can't judge whether this change to focused R&D is the right one, there seems plenty of evidence that R&D performance has not yielded the required results and GSK board should be best placed to decide how to fix it. It will take quite some time to see the full effects, although the cost impacts should be visible earlier. "it is hard to recall another turnaround effort in the industry with the same scale and speed. It "has never been done in any major pharmaceutical company that I am aware of," one industry veteran said. "Some insiders see the restructuring as a breath of fresh air. Others say the depth of the executive and scientific cull has sparked chaos, and they blame Ms. Walmsley for being too focused on short-term shareholder returns."Radical restructuring is not without risk, especially in knowledge based organizations. Loss of key people and capability could undermine delivery, lets hope those who feel they are breathing fresh air are the one who can deliver! Even if the strategy is right, it will take careful management of the implementation.I hold over 5% here (more before the SP slide!) and will continue to do so for now, I hope Ms. Walmsley can make it work.H2
IOMINVESTCOM
25 Mar 2018
Glaxo CEO Dispenses Bitter Pill to Fix R&D Noemie Bisserbe and Joann S. Lublin LONDON -- Emma Walmsley, the rookie chief executive of GlaxoSmithKline PLC, is giving the 300-year-old British drug giant's ailing research-and-development operations a dose of bitter medicine.In the roughly one year that the 48-year-old former cosmetics executive has been in place, Ms. Walmsley has replaced nearly half of Glaxo's top 125 executives, according to the company. She has reassigned or let go some 400 scientists in its drug-development unit, and another 100 science jobs are still on the line, according to people familiar with the matter. She is also shutting down more than two dozen clinical drug trials, as she narrows the focus of Glaxo's drug-discovery portfolio.Outsiders and recruiters say it is hard to recall another turnaround effort in the industry with the same scale and speed. It "has never been done in any major pharmaceutical company that I am aware of," one industry veteran said.A Glaxo predecessor company introduced the first commercial treatment for HIV in the late 1980s, but more recently the company has lagged behind in research productivity -- the art of squeezing profit out of drug discoveries. Glaxo's so-called annualized economic return to R&D spending -- which measures profits generated as a return on earlier R&D investment, in excess of the cost of capital -- was just 3% from 2007 to 2016, according to an analysis by SSR Health. That put it at No. 13 among the 22 largest U.S.-listed pharmaceutical companies ranked by R&D spending."We need to get out of our own way," Ms. Walmsley said in a recent interview. "Bring more agility, courage, accountability, passion and pace."Some insiders see the restructuring as a breath of fresh air. Others say the depth of the executive and scientific cull has sparked chaos, and they blame Ms. Walmsley for being too focused on short-term shareholder returns."Some people find it challenging, others embrace it," said Phil Thomson, Glaxo's president of global affairs.While Ms. Walmsley's changes may be more dramatic than her peers', they reflect a wider industry trend. After plowing billions of dollars into new businesses aimed at cushioning companies from the boom-and-bust nature of developing new drugs, companies like Pfizer Inc. and Novartis AG also are refocusing on high-margin prescription drugs.Ms. Walmsley's predecessor, Andrew Witty, spent most of his nine-year tenure developing slower-but-steadier consumer health-care products. Ms. Walmsley, who had come to Glaxo from French cosmetics giant L'Oréal SA, ran that business for more than five years.Last April, days after taking the reins at Glaxo, Ms. Walmsley summoned the company's top 200 research and development executives to two of its global R&D offices, in Ware, England, and Upper Providence, Pa., according to people who attended the meetings. Management cued up a video featuring half a dozen analysts and investors discussing Glaxo's lackluster R&D."It was a hard-hitting video," Mr. Thomson said. "We wanted to show them how the outside world sees us."In July, Ms. Walmsley announced she would slash the company's drug pipeline and direct 80% of its R&D budget -- which came in at about $6.3 billion in 2017 -- to just a handful of specialties, including respiratory illnesses, HIV, oncology and conditions related to inflammation due to an abnormal immune-system response.She said she would target annual cost savings of about $1.4 billion by 2020. Glaxo said it planned to close at least nine manufacturing sites.Ms. Walmsley has made big changes at the top, too. In September, she replaced Abbas Hussain, an eight-year Glaxo veteran who was head of pharmaceuticals and had been a contender for the top job, with a hire from rival AstraZeneca PLC, Luke Miels. Mr. Hussain joined a private-equity firm in October.She also poached Hal Barron from Alphabet Inc.'s Google. The tech giant had hired him to help run its drug-research
