GSK may put Horlicks on the block to fund $13-bn Novartis deal

British pharmaceutical giant GlaxoSmithKline (GSK) is likely to sell its health food drink brand Horlicks to fund a buyout of the residual stake in its consumer healthcare joint venture (JV) with Novartis.

In a statement on Tuesday, the company said it was considering a strategic review of Horlicks and other consumer nutrition products to support funding of the stake purchase in the consumer healthcare JV with Novartis.

The review would also include an assessment of the company’s 72.5 per cent shareholding in GlaxoSmithKline Consumer Healthcare India, the company said. A boardmeeting of the latter is slated for Wednesday. “It would be interesting to know the outcome of the board meeting in line with the global announcement today,” said Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss.

GlaxoSmithKline said on Tuesday it would buy Novartis’ 36.5 per cent stake in their consumer healthcare JV for $13 billion in cash. The deal with Novartis will give GSK full control of a portfolio of products, including Sensodyne toothpaste (available in India), Panadol headache tablets (called Crocin here) and pain reliever Voltaren (also available in India), which are all part of the JV.

The British giant may let go of Horlicks, an 83-year old brand and leader in the ~60-billion domestic health food drink market.

Horlicks accounts for 75 per cent of GSK Consumer Healthcare’s revenue in India. The company’s net sales stood at ~44.21 billion in 201617. It has over 50 per cent market share in the domestic health food drink market. Other players include Bournvita from Mondelez and Complan from KraftHeinz.

India is also the largest market for Horlicks globally, followed by a smaller presence in West Asia, Pakistan and Malaysia.

It was still unclear who the buyers of the brand would be, but in an emailed statement the company said India remained a priority market for it. “The consumer healthcare business will continue to invest in growth opportunities for its over-the-counter and oral health brands such as Sensodyne and Eno (antacid). The group is also actively investing in its pharmaceutical and vaccine businesses, including building new manufacturing capacity at Vemgal, Karnataka and Nashik, Maharashtra,” said Simon Steel, vice-president, global corporate media relations, GSK. The strategic review of Horlicks would be concluded by the end of 2018, he added.