Moneycontrol
Last Updated : Mar 28, 2018 09:01 AM IST | Source: CNBC-TV18

Funding GSK's $13 bn pharma deal: Are Horlicks and Boost on the block?

Horlicks and Boost together are the leading malt based drinks in India with a 56 percent market share followed by Bournvita, Complan and others.

CNBC TV18 @moneycontrolcom

In the deal space pharma major Glaxo-Smith-Kline (GSK) is set to acquire Novartis' stake in their consumer healthcare joint venture. GSK is buying 36.5 percent stake in the joint venture from Novartis for USD 13 billion.

In its statement, GSK said that it is also initiating a strategic review of Horlicks and its other consumer healthcare nutrition products to support funding of the transaction.

Just a week after GSK pulled out of the USD 20 billion dollar bid to acquire Pfizer's consumer business, it has agreed to spend USD 13 billion to buyout Novartis' 36.5 percent stake in the consumer healthcare JV and take global leadership.

And to fund such a large transaction, GSK is intending to sacrifice its oldest nutrition drink brand Horlicks, which is largely an Indian subcontinent business. The company is now initiating a strategic review of Horlicks and other consumer nutrition products that would include products like Boost and also an assessment of GSK's 72.46 percent shareholding in the GSK Consumer India subsidiary.

Now for GSK global, consumer healthcare contributes nearly 26 percent to revenues and of this India contributes over 80 percent. So of the total consumer health revenue nearly Rs 5050 crore, of which India consumer healthcare contributed nearly Rs 4400 crores.

For GSK Consumer Healthcare in India, the health food drinks category Horlicks and Boost brands and biscuits etc have been the cash cow contributing nearly 90 percent to revenues.

Horlicks and Boost together are the leading malt based drinks in India with a 56 percent market share followed by Bournvita, Complan and others.

The market has seen some headwinds post demonetisation and analysts say possibly companies like Danone and Nestle could be interested in picking up the brands.
First Published on Mar 27, 2018 08:02 pm
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