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Report suggests GSK on brink of consumer health sale

US private equity firm Thomas H Lee Partners seen as lead candidate to take over various brands including Alli, Solpadeine and Zantac

GlaxoSmithKline (GSK) is expected to shortly announce a deal to sell various consumer health brands, which the company first said it would put up for sale in April.

A Bloomberg report suggests that US private equity firm Thomas H Lee Partners (THL) is the lead candidate to take over the business, including brands such as over-the-counter (OTC) weight loss product Alli (orlistat), analgesics such as Solpadeine and OTC version of gastrointestinal drug Zantac (ranitidine).

Thomas H Lee and GSK have yet to announce a formal deal, however, and while it is believed to be the favoured buyer, other parties are still said to be in the running, including Bain Capital and Blackstone Group/Prestige Brands.

GSK said back in April that the products it intends to divest had sales of around £500m for 2010 - around 10 per cent of total turnover for GSK's Consumer Healthcare division for the year. Other big-selling products - notably Sensodyne toothpaste, Horlicks drink and the Panadol range of paracetamol-based painkillers - are excluded from the offer.

GSK has said that it "lacks critical mass" for the brands up for sale, which analysts have interpreted to mean that it wants to concentrate on global lines while divesting those with a more regional positioning.

Alli is something of an exception to that regional rule, but revenues from the product have never lived up to GSK's early blockbuster expectations at its launch in 2007. Sales were up and down in the ensuing years - reaching a peak of around $300m in 2009 - but reportedly fell back again in 2010.

Meanwhile, THL has a heritage in making healthcare sector investments, and in 2005 was part of a consortium - which also included Bain Capital - that took over US consumer health company Warner Chilcott in a $3.1bn deal.

Since then, THL has invested in healthcare business services company Intermedix and took a stake in last year in contract research organisation (CRO) InVentiv Health - itself in a highly acquisitive period at the moment having taken over PharmaNet, Campbell Alliance and i3.

15th December 2011

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