Categories Health Care

GSK reorganization gains steam with Tesaro buyout, sale of Asia unit

The recent spate of cancer drugs securing FDA approval indicates that research and development in the area are progressing rapidly. So, it is natural that every pharmaceuticals company strives to get a share of that lucrative market. The decision by GlaxoSmithKline (GSK) this week to acquire an American cancer drug maker with a promising future is the right move by the British healthcare giant in its efforts to streamline operations.

The acquisition of Massachusetts-based drug maker Tesaro (TSRO) for $5.1 billion comes at a time when GSK’s pharmaceuticals segment is badly in need of attention. The primary attraction of the deal is Tesaro’s ovarian cancer drug Zejula, which will help GSK to compete effectively with its closest rival in Europe.

Zejula, which is already in the market, is rapidly catching up with the other leading formulations in the segment. Interestingly, the $75-per-share purchase price represents a 110% premium to Tesaro’s average stock price. The deal is part of new CEO Emma Walmsley’s strategy to revitalize GSK’s pharma division, which had lost much of its sheen under the previous chief executive.

The main attraction of the deal is Tesaro’s ovarian cancer drug Zejula, which will help GSK to compete effectively with its closest rival

In a separate transaction, GSK agreed to sell its health supplement brand Horlicks, which is quite popular in Asia, to Unilever (UN) for about $3.8 billion. Facing stiff competition from direct-to-consumer brands, Unilever has long been making aggressive moves to revive its weakening growth momentum.

Unilever announces CEO retirement

The deal covers GSK’s health food and drinks portfolio in the Asian market, primarily India and Bangladesh. It comes less than a month before Unilever’s long-term executive Alan Jope is slated to take charge as the new CEO. The consumer products giant aims to cash in on the changing customer taste, marked by the mass shift from junk food to healthier alternatives.

However, investors in GSK responded negatively to the deals and the stock fell about 8% in early trading Monday on the Nasdaq stock exchange. The stock had gained steadily over the past twelve months, after ending a downward spiral that began several years ago. Meanwhile, Tesaro shares surged around 58%, recovering from its multi-year lows.

 

Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “GSK reorganization gains steam with Tesaro buyout, sale of Asia unit

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment
Loading...

Cancel
Viewing Highlight
Loading...
Highlight
Close
Top