GlaxoSmithKline ($GSK) has long explored a sale of some $3 billion worth of its older drugs, planning to shed products by geographic region to meet buyers' interests. Now, the company could have a more enticing offer on its hands as private equity firm Apollo Global Management is planning to bid on GSK's entire portfolio of drugs, people familiar with the process toldReuters.
Last month, sources told Reuters that GSK would begin to take bids for aging products in November and that the company would hive off drugs by geographical region, reflecting the needs of buyers. Potential suitors such Denmark's Lundbeck and India's Lupin are both looking to expand in the U.S. and are also preparing for patent losses some of their top-selling products. GSK brands up for sale include the antidepressant Paxil, migraine treatment Imitrex, stomach acid-reducer Zantac and nausea fighter Zofran--drugs expected to have combined 2014 sales of around ?1 billion ($1.6 billion) but face competition from cheap generics.
As part of the deal, GSK would hold onto rights for the drugs in emerging markets, where demand for the products is still growing.
This is not the first time private equity has weighed a buyout of Big Pharma's aging meds. In August, KKR, Warburg Pincus, Blackstone Capital, Bain Capital and Apollo were also said to be eyeing GSK's and Novartis' older drugs, planning to merge the two company's portfolios into one bigger set.
Meanwhile, GSK is waiting to complete its three-part deal to sell and combine assets with Novartis ($NVS). In April, the company engineered a $20 million asset swap with the Swiss drugmaker, handing its oncology business to Novartis, snatching up the latter's vaccines unit and setting up a consumer health joint venture to market over-the-counter products with an estimated $11 billion in sales. Novartis and GSK expect to close the multipart deal sometime early next year, the companies said when the asset swap was announced.
GSK is not the only drugmaker looking to unload aging products. Abbott Laboratories ($ABT) recently sold off many of its older drugs to Mylan ($MYL) in a $5.3 billion deal, and in September AstraZeneca ($AZN) passed off 18 aging meds to specialty generics maker IGI Laboratories for $500,000 up front, plus $6 million in milestones and up to $3 million in royalties. Merck ($MRK) and Sanofi ($SNY) are also shopping around portfolios, but Sanofi's plans have stalled as top company managers could not agree on how to move forward with the sale.