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Bloomberg
Two of the world’s biggest drugmakers agreed to create a giant seller of over-the-counter medicines, in yet another sign that pharmaceutical giants are slowly turning away from the grocery store and back towards the laboratory.
GlaxoSmithKline Plc and Pfizer Inc said that they plan to combine their sprawling consumer-health businesses into a single company selling everything from Advil pain pills to Tums stomach tablets. Together, the businesses had sales of $12.7 billion last year. The new entity, which will be 68 percent-owned by Glaxo, will eventually be listed on the UK stock market.
Drugmakers had once envisioned controlling every corner of home medicine cabinets, from everyday personal-care items to therapies for cancer and cardiovascular disease. The steady revenue produced by consumers restocking toiletries and headache remedies was seen as a stabiliser for the more volatile — though vastly more lucrative — business of developing and selling treatments prescribed by a doctor.
Recent shifts in the health-care business and in the broader economy, however, have challenged that model. Big pharmaceutical companies are increasingly focussed on developing high-priced new drugs that draw on cutting-edge research in genetics and other fields. At the same time, the cost of researching new cures is climbing even as insurers and governments demand lower prices.
Meanwhile, profits in many consumer businesses have been compressed by competition and the growing power of companies like Amazon.com Inc and Walmart Inc to drive prices for a range of goods ever lower.