GlaxoSmithKline (GSK) has sold four of its off-patent drug products to a South African drugmaker for £170m ($336m), describing the move as part of an ongoing effort to simplify its manufacturing operations.
The drug major said that all ex-US rights to the hypothyroid treatment Eltroxin (levothyroxine), the heart drug Lanoxin (digoxin), the immunosuppressant Imuran (azathioprine) and the gout medication Zyloric (allopurinol) were being transferred to Aspen Global, which is part of the Southern hemisphere's largest generics manufacturer, Aspen Pharmacare Holdings.
GSK, which will also retain rights to Zyloric in Japan, explained that it will continue to produce the drugs for a transitional period, after which Aspen will be responsible for all manufacture.
The UK firm added that the divested drugs, which it said require "specialised manufacturing processes," had generated sales of around £80m ($158m) in 2007 in markets outside the USA.
In 2007 GSK, the world's second-largest drug company unveiled its 'Operation Excellence' restructuring scheme, which is designed to deliver annual pre-tax cost savings of up to £700m by the year 2010. The firm explained that 40 per cent of these savings would be achieved by cutting down on production capacity, simplifying its manufacturing activities and increased use of industrial outsourcing.
GSK's CEO, Andrew Witty, commented that: "As we look to maximise the value of our portfolio and simplify our manufacturing operations we are actively seeking out opportunities to divest products which can be efficiently commercialised by other parties. "
"Aspen is a well respected and fast growing pharmaceuticals group with an extensive branded generic portfolio and pipeline. Ensuring continuity of supply for patients was an important consideration in our choice of partner for this agreement," added Witty.
Stephen Saad, Aspen's CEO told the allAfrica.com website that: "The deal [will] give Aspen a springboard to launch its products into the more than 200 markets where GSK already sold these drugs." He added that the purchase is also consistent with the company's strategy to expand its international presence.
Saad concluded that: "We are confident Aspen's global distribution network will continue to supply these important products to patients across the world." Aspen's share price was up 2.6 per cent, or 80 cents, to 31.80 rand in trading on the South African stock exchange on the day of the announcement.