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GSK, Novartis create an $11 billion consumer healthcare business

BY Michael Johnsen

LONDON — Following a multifaceted deal with Novartis on Tuesday, GlaxoSmithKline and Novartis have created a consumer healthcare giant with annual worldwide revenues of $11 billion on a 2013 pro forma basis. The new business, to be called GSK Consumer Healthcare, will hold category leading positions and brands in wellness, oral health, nutrition and skin health, the company reported.

“The Novartis OTC portfolio is highly complementary to GSK’s and has many well-known, widely recommended brands, such as Voltaren, Excedrin, Otrivin and Theraflu," stated Sir Andrew Witty, GSK CEO. "Together, we will create the world’s premier OTC business with clear opportunities to accelerate revenue growth."

Emma Walmsley, currently GSK’s consumer head, has been appointed as CEO designate of the new business and will be a member of its board. Witty will be chairman of the board. The board will comprise directors from both GSK and Novartis. 

GSK will have majority control of the joint venture with an equity interest of 63.5%

In wellness, the new combination’s $5.7 billion complementary portfolio will create one of the world’s largest OTC businesses with a leading position in more than 35 countries. According to GSK, Novartis’ portfolio has had relatively limited exposure to high growth emerging markets and this presents multiple new growth opportunities for several major brands and innovations, notably Voltaren, Excedrin and Otrivin. 

Similarly, GSK’s brands would benefit from exposure to Novartis’ highly successful European businesses. 

According to a Wall Street Journal breakdown of the deal, "some of the new company’s biggest products will be in pain and cold relief: the North American brand Excedrin and the European brands Panadol, Beecham’s and Voltaren gel, for migraines, headaches, colds and joint pain. Antismoking aids NicoDerm, NiQuitin and Nicotinell, in gums, lozenges and patches, will also be key products." The Novartis business will also bring such products as cough suppressant Sinecod, nasal decongestant Otrivin and fiber supplement Benefiber.

The second-largest area for the combined business will be oral care, according to the WSJ report, including Sensodyne and Aquafresh toothpastes and Poligrip denture adhesive. 

 

 

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Reports: Novartis exits vaccines and animal health while acquiring oncology business from GSK

BY Michael Johnsen

ZURICH — Novartis on Tuesday made a number of moves that have fundamentally reshaped its business, according to published reports. Novartis exchanged its vaccine business with GlaxoSmithKline in a deal valued at $7.1 billion for GSK’s oncology portfolio (at a cost of $14.5 billion) and divested its animal health unit to Ely Lilly for approximately $5.4 billion. 

As part of its deal with GSK, Novartis and GSK have created a joint venture with GSK in consumer healthcare. GSK will take the lead in running a future consumer health business worth about $10 billion in annual revenue with Novartis, Reuters reported. Meanwhile, Eli Lilly will have the No. 2 animal health business by revenue worldwide. 

The moves make Novartis a significant supplier of high-margin cancer medicines (No. 2 behind Roche), while GSK becomes a vaccine powerhouse.  

"The global pharmaceuticals sector has seen a flurry of deal-making recently as large companies seek to focus on a small number of leading businesses, while smaller specialty and generic producers seek greater scale," Reuters reported. 

Novartis reported it would start a separate sale process for its flu business, which was not part of the deal with GSK.

 

 

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McKesson to raise awareness around Earth Day with fourth annual Green Week

BY Michael Johnsen

SAN FRANCISCO — McKesson Corp. on Tuesday announced that in observance of Earth Day, the company will celebrate its fourth annual Green Week April 21-25. McKesson’s Green Week will focus on raising awareness and inspiring action. While informing employees about McKesson’s efforts to reduce its environmental footprint, the campaign will also provide ways that employees can make a difference. Each day of McKesson’s Green Week 2014 is organized around a theme, such as Meat Free Monday or Fossil Free Friday.

“McKesson aims to create better health for our customers, our employees, our communities and our planet," stated Carrie Varoquiers, VP corporate citizenship. "Engaging our employees in environmental efforts only strengthens our commitment to maintaining a healthy, vibrant and sustainable company.”

McKesson will also encourage participation in an online pledge prompting all its employees to think about how they might change their habits and celebrate Earth Day every day. McKesson will be donating one tree to the National Forest Foundation for each employee who submits their pledge.

McKesson’s employee-led Environmental Councils drive awareness of local environmental initiatives and help scale enterprise-wide sustainability programs. The Councils represent a variety of locations, from offices of 2,000 employees to distribution centers to call centers. Environmental Councils host events, speakers, vendor fairs and volunteer activities.

McKesson’s business practices promoting better health include:

  • Fleet Efficiency: Since 2010, McKesson has focused on reducing fleet emissions by replacing unleaded gasoline and diesel engines with more fuel-efficient compressed natural gas engines in its U.S. Pharma sales fleet. Between fiscal years 2012 and 2013 alone, fleet CO2 emissions (in pounds) decreased 24%, and average CO2 emissions per vehicle decreased 30%;
  • Building Efficiency: McKesson uses the Environmental Protection Agency’s Energy Star Portfolio Manager to benchmark its facilities. In its U.S. portfolio, 25 facilities qualify as Energy Star, totaling 2.4 million square feet; and
  • Supply Chain Efficiency: To analyze McKesson's distribution operations, the company developed the Supply Chain Sustainability Model in partnership with IBM Research. SCSM collects energy use and carbon emissions from fleet vehicles and every piece of equipment in the distribution center. It allows McKesson the agility to adjust operations, which drives decreased carbon emissions and reduced fuel consumption.

 

 

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