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GSK sells off more OTC medicines

Omega acquires products including Nytol and Lactacyd for €470m

GlaxoSmithKline has sold a block of over-the-counter (OTC) medicines to Belgian company Omega for £391m (€470m) in cash as it continues its revamp of its consumer health operations.

The agreement is expected to conclude in the second quarter of 2012 and includes a number of well-known GSK brands, including Lactacyd, Abtei, Solpadeine, Zantac, Nytol and Beconase, which collectively had sales of around £185m last year.

A condition of the sale is that a manufacturing facility in Herrenburg, Germany, where many of the brands are produced, will be taken over by Omega. The plant employs around 110 people and most are expected to transfer to the new owner.

GSK announced its intention to divest £500m-worth of OTC products last year as part of a wider effort to streamline its business and focus on core brands.

In January, 2012, it completed the sale of another block of OTC products distributed in the US, Canada and Europe with annual sales of around £134m to Prestige Brands Holdings in a deal valued at £426m, after failing to find a global buyer for the entire portfolio.

The latest deal means that GSK has now completed the bulk of its planned divestments, with one tranche of products with annual sales of £60m in markets outside of Europe and North America remaining.

Also outstanding is GSK's OTC weight-loss product Alli (orlistat), which remains on the block but has been restrained by "a temporary third party supply interruption", according to the company.

Proceeds from the Omega agreement are expected to be in the vicinity of £310m, and this will be distributed among GSK's shareholders during 2012, said the firm.

"Given the continued economic challenges across the Eurozone, I am pleased that we have been able to transact these assets at a good price for GSK," commented GSK's chief financial officer Simon Dingemans.

He added that the move would "simplify" GSK's consumer health business by allowing it to "focus on its priority brands and markets".

16th March 2012

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