Pfizer Inc. and GlaxoSmithKline have entered into an agreement to create a global consumer healthcare company with their iconic brands. Pfizer will contribute its consumer healthcare business to GlaxoSmithKline’s existing consumer healthcare business. The 2017 global sales for the combined business were approximately $12.7 billion. 

Pfizer will receive a 32% equity stake in the joint venture, entitling Pfizer to share the joint venture’s earnings and dividends. Pfizer will have the right to appoint three out of the nine members of the joint venture’s board. The transaction, which is expected to close 1H19, subject to customary closing conditions, is expected to create $650 million in cost synergies.

The joint venture will be a category leader in pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health and therapeutic oral health. It’s expected to be among the largest consumer healthcare players in key geographies, including the U.S., Europe, China, India and Australasia. The joint venture will operate globally under the GSK Consumer Healthcare name.

“We are pleased to announce this new joint venture for Pfizer Consumer Healthcare, delivering on our commitment to complete the strategic review for this business in 2018,” said Ian Read, chairman and chief executive officer, Pfizer. “Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses.”

Following the integration, GSK intends to separate the joint venture as an independent company. GSK may also sell all or part of its stake in the joint venture in a contemporaneous IPO. 

“The combination of these leading businesses with distinct regional and category strengths will be more sustainable and broader in scope than either company individually,” said Albert Bourla, chief operating officer and incoming chief executive officer, Pfizer. “We believe that this joint venture is a great opportunity to ensure the future success of Pfizer Consumer Healthcare while unlocking meaningful after-tax value for Pfizer shareholders.” 

Emma Walmsley, GSK’s chief executive officer, will be chair of the new joint venture. Brian McNamara, currently CEO GSK Consumer Healthcare, will be CEO of the new joint venture and Tobias Hestler, currently CFO GSK Consumer Healthcare, will be CFO.