GSK puts old antibiotics and UK Horlicks business on the block

[LONDON] GlaxoSmithKline said it was considering the sale of its cephalosporins antibiotics business and intended to divest its small Horlicks business in Britain, while retaining the much bigger malted drink operation in India.

The antibiotics business under strategic review covers the brands Zinnat/Ceftin, Zinacef and Fortum and has worldwide annual sales estimated at around £200 million (S$356.96 million), but it faces growing competition from cheap generics.

In addition, GSK announced just over 300 job losses on Wednesday and confirmed that the UK-focused MaxiNutrition sports nutrition brand would be sold.

The combined annual UK sales of Horlicks and MaxiNutrition, which industry sources had previously said were on the block, are around 30 million pounds. GSK is also exploring options to divest some other smaller non-core nutrition brands.

The moves show new chief executive officer Emma Walmsley putting her mark on Britain's biggest drugmaker as she tries to simplify operations, improve operating efficiencies and focus on priority areas.

She will outline her wider vision for GSK alongside half-year results next week.

The company said in a statement that none of the changes had been taken as a result of Britain's decision to leave the European Union.

Although GSK will continue to make other antibiotics, such as Augmentin, and will conduct research into new medicines to fight so-called superbug infections, it will no longer need as many factories.

As a result, it has decided not to proceed with a previously planned £350 million investment to build a new facility in Ulverston, northern England, and it will outsource some manufacturing work at its Worthing site on the south coast.

The cuts at Worthing and at a factory in Slough, where Horlicks is made, will result in around 320 job losses over the next four years. Overall, GSK employs 17,000 staff in Britain, with 5,000 in manufacturing, and it plans to invest more than £140 million at other UK sites between now and 2020.

In Britain, where Horlicks is sold as a bedtime drink, the product has largely fallen out of favour and sales are very limited. Indian demand for Horlicks, by contrast, is strong and GSK has developed the malted barley milk drink into its top consumer brand in the country.

Selling both MaxiNutrition, which GSK bought for £162 million in 2010, and the British arm of Horlicks, which is an even smaller business, will not move the dial at the drugmaker, given its market value of £79 billion.

Horlicks is more than 140 years old with origins dating back to 1873, when two British-born men, James and William Horlick, first founded a company in Chicago to manufacture the drink.

REUTERS