LONDON, UK: GSK has announced plans to spinout Consumer Healthcare business into the newly independent company, Haleon proposed to be listed on London Stock Exchange (LSE) in July 2022.

The separation of GSK Consumer Healthcare, to form Haleon, is subject to approval from shareholders, and will be by way of a demerger of at least 80% of GSK’s 68% holding in the Consumer Healthcare business to GSK shareholders (the Consumer Healthcare business is a Joint Venture between GSK and Pfizer, with GSK holding a majority controlling interest of 68% and Pfizer holding 32%).

As previously announced, GSK will retain up to 20% of its holding in Haleon, which it intends to monetise in a disciplined manner to strengthen new GSK’s balance sheet further. Before the demerger, GSK is expected to receive a dividend of more than £7 billion from Consumer Healthcare, supporting recapitalisation of the GSK balance sheet and creating new flexibility to invest in innovation and growth. Pfizer will receive a dividend of more than £3 billion and will retain its 32% stake post the demerger.

Emma Walmsley, Chief Executive Officer, GSK said: “Today is an important milestone for GSK as we formally introduce Haleon to investors. It comes ahead of what promises to be the most significant corporate change for GSK in the last 20 years, to create two new growth companies that will positively impact the health of billions of people.

“Haleon has been built through a series of progressive strategic M&A and divestment moves taken in the last few years, creating a focused, global consumer healthcare business with an exceptional portfolio of brands. Through the demerger we will unlock the potential of both GSK and Haleon, and in today’s meeting will show why we believe Haleon will be a strong, highly successful growth-orientated company.”

 Brian McNamara, Chief Executive Officer Designate, Haleon said: “We are excited to share our plans for Haleon and the incredible opportunity we have before us.  Led by our purpose – to deliver better everyday health with humanity – Haleon is strongly positioned to play a vital role in a growing, more relevant sector than ever.

Today, we will show investors how our world-class portfolio of brands, alongside our competitive capabilities and a compelling strategy to outperform, underpins our confidence in delivering annual organic sales growth of 4-6% in the medium term, and a sustainable financial performance that can drive continued investment in growth and deliver attractive returns to shareholders.”

Global leader focused on consumer health

Haleon has been created from a series of progressive strategic moves to develop the GSK Consumer Healthcare business. The business has been transformed through the successful integrations of the Novartis consumer health portfolio in 2015 and the Pfizer portfolio in 2019.

This transformation has provided a platform to focus, scale and optimise many aspects of the business including divesting lower growth brands, implementing a new R&D/innovation model, rationalising the manufacturing footprint and optimising the supply chain, alongside continued investment in brands, innovation and capabilities.

This has created a leading global consumer healthcare business, which achieved £9.5 billion in sales during 2021. Led by a highly skilled management team with deep experience and a track record of success in consumer healthcare and FMCG, the business has a portfolio of world-class brands. It offers a compelling proposition that combines human understanding with trusted science.

Exceptional portfolio of category-leading brands

Haleon is the global leader in each of the major categories in which it operates – Therapeutic Oral Health; Vitamins, Minerals and Supplements; Pain Relief; Respiratory Health; and Digestive Health. The portfolio comprises global power brands such as Sensodyne, Panadol, Advil, Voltaren, Theraflu, Otrivin, and Centrum; and iconic, local strategic brands such as TUMS, ENO, Flonase, ChapStick and Emergen-C.

Human understanding with trusted science

Haleon has a suite of proprietary assets focused on generating deep human understanding to support brand innovation, engagement with experts and education of consumers. These include cutting-edge centres for shopper research, consumer knowledge, and social listening to generate new insights, identify future trends and rapidly test new concepts and claims.

 Alongside this, Haleon has deep technical and scientific expertise, with world-class regulatory and medical capabilities and trusted relationships with more than three million healthcare professionals worldwide.  It has a global, standalone R&D network with three centres supporting 1,400 highly skilled scientists, including practising dentists, pharmacists, nutritionists, and medics.

Together, this platform of human understanding and trusted science enables Haleon to operate end-to-end across consumer science and consumer experience, providing a strong competitive advantage to develop and launch innovation. Over the last three years, Haleon has successfully delivered more than 19,000 regulatory applications and approvals.

In 2021, R&D investment was £257 million, representing 2.7% of sales. This is competitive with industry peers, and it will remain a priority area for future investment and allocation of capital.

Global footprint and industry-leading route-to-market

Haleon serves more than 100 markets worldwide and has an established presence in all key channels, including one of the largest networks and coverage of pharmacies globally with leadership in Europe and strong partnerships with mass retail and pharmacy chains in the US. In the last two years, investments have resulted in a two-fold increase in e-commerce sales, a key growth channel, with particularly strong market outperformance in China.

Strong organic sales growth with sustainable margin expansion and strong free cash flow

The business is well-positioned to build on its track record of performance and grow sustainably ahead of the market in the medium term. The fundamentals for the £150 billion consumer healthcare market are strong, reflecting an increased focus on health and wellness, significant demand from an ageing population and emerging middle class, and sizeable unmet consumer needs. 

Over the period 2019-2021 Haleon delivered 4.4% sales growth CAGR1, ahead of the market despite the adverse impact of the COVID pandemic. At the same time, Haleon has balanced investment with delivering on its margin ambitions, growing its adjusted operating margin from 19.5% to 22.8% in 2021. This would have equated to an adjusted operating margin of approximately 25% based on 2017 exchange rates and adding back the dilutive impact of the additional divestments. Free cash flow has been equally strong with around £1.5 billion of free cash flow generated in each of 2020 and 2021, excluding proceeds from divestments and costs for integration and separation.