Daily Mail

Glaxo’s £7bn day of drama

Hor­licks is sold for £3bn US can­cer firm bought for £4bn But shares fall 7.6pc

- By Matt Oliver Pharmaceutical Industry · Cancer · Medicine · Investing · Industries · Health Conditions · Business · GlaxoSmithKline · United Kingdom · Boston · Unilever NV · Barron, Barron County, WI · Novartis · United States of America · Europe · European Union · AstraZeneca · Clovis, CA · Nestle · Coca-Cola Company · India · Bangladesh · Emma Walmsley · Emma · Tesaro · Clovis Oncology · Glaxo Wellcome

GLAX­OSMITHK­LINE is buy­ing an Amer­i­can can­cer spe­cial­ist for £4bn as boss Emma Walm­s­ley seeks to re­build its phar­ma­ceu­ti­cals busi­ness.

In a dra­matic day for Bri­tain’s biggest drug firm, Walm­s­ley re­vealed it was pur­chas­ing Bos­ton-based Te­saro for around £59 ($75) a share, a 62pc pre­mium on its pre­vi­ous clos­ing price.

The an­nounce­ment came just hours af­ter Glaxo separately con­firmed the £3.1bn sale of malt drinks brand Hor­licks to Unilever.

That deal ini­tially lifted shares. But the Te­saro an­nounce­ment sent them crash­ing back down, wip­ing al­most £6bn off the com­pany’s value, as in­vestors wor­ried that Glaxo had over­paid for as­sets that did not fit with the rest of its port­fo­lio.

But Walm­s­ley and her star sci­en­tist, Dr Hal Barron, ar­gued that the Te­saro deal could be trans­for­ma­tive for the com­pany.

Since tak­ing the helm in April 2017, Walm­s­ley, 49, has led a rad­i­cal over­haul at Glaxo to get it pro­duc­ing block­buster drugs again.

The mother- of-four said: ‘ When I be­gan in this job last year I said we want all our busi­nesses to grow, but the num­ber- one pri­or­ity is to strengthen our pharma busi­ness and par­tic­u­larly the pipe­line.

‘The ac­qui­si­tion of Te­saro will, by ac­cel­er­at­ing the build of our on­col­ogy pipe­line and com­mer­cial foot­print, along with pro­vid­ing ac­cess to new sci­en­tific ca­pa­bil­i­ties.’

She added: ‘We are bet­ting on this be­ing a great driver for the com­pany.’

It marks Glaxo’s re­turn to the on­col­ogy drugs mar­ket af­ter a deal in 2014 that saw it swap its can­cer drugs port­fo­lio for the vac­cines di­vi­sion of No­var­tis.

With Te­saro, it gains con­trol of Ze­jula, a treat­ment for ovar­ian can­cer sold in the US and Europe, which Barron said holds sig­nif­i­cant prom­ise.

Ze­jula is part of a cut­ting-edge class of drugs known as PARP in­hibitors, which block the process that al­lows can­cer cells to grow.

In ad­di­tion to ovar­ian can­cer, Barron said the medicine also had po­ten­tial to treat other types of can­cer, in­clud­ing lung can­cer, breast can­cer and prostate can­cer, if it was com­bined with other treat­ments. He said: ‘We be­lieve that PARP in­hibitors will be a more im­por­tant ther­a­peu­tic class than is cur­rently ap­pre­ci­ated.

‘There is an enor­mous amount of sci­ence that is evolv­ing, and this is just the tip of the ice­berg.’

How­ever, Glaxo is also en­ter­ing what is fast be­com­ing a very com­pet­i­tive space.

Arch-ri­val As­traZeneca owns Lyn­parza, seen as the mar­ketlead­ing PARP in­hibitor, and Clo­vis On­col­ogy, another US firm, is also fight­ing for mar­ket share.

In­vestors ap­peared un­nerved by the takeover. Shares in Glaxo yes­ter­day plunged by 7.6pc, or 123.6p, to 1498p, the firm’s biggest sin­gle-day drop since 2002.

The deal is the first ma­jor takeover by Glaxo un­der Walm­s­ley and eas­ily one of the biggest since the com­pany formed in 2000 through the merger of Glaxo Well­come and Smithk­line Beecham.

Speak­ing from Bos­ton, Walm­s­ley said she would con­sider other so- called ‘ bolt- on’ takeovers if they helped to strengthen the phar­ma­ceu­ti­cals busi­ness.

The deal is ex­pected to eat into earn­ings un­til 2020 as the com­pany pumps cash into re­search ef­forts at Te­saro.

On the other side of the world, Glaxo’s deal with Unilever freed up more cash for it to plough into takeovers.

It fol­lowed an auction which pit­ted Unilever against the likes of Nes­tle and Coca-Cola.

The trans­ac­tion cov­ers GSK’s health food and drinks port­fo­lio in In­dia, Bangladesh and 20 other pre­dom­i­nantly Asian mar­kets, with sales com­ing mostly from the Hor­licks and Boost malt drinks brands.

Unilever said it would pay partly in cash and partly in shares.

 ??  ?? Tak­ing things in her stride: Emma Walm­s­ley
Tak­ing things in her stride: Emma Walm­s­ley
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