GlaxoSmithKline backs out of bidding for Pfizer’s consumer unit

“While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation,” said Emma Walmsley, chief executive officer, GSK.

After Reckitt Benckiser backed out of the move to buy the pharma giant’s business, GSK was expected to have gone ahead with the deal to acquire the consumer healthcare business.

GSK shares shot up in the markets after the announcement of its pulling out of the bidding for Pfizer. About two days ago, GSK made a final bid for Pfizer’s over-the-counter treatments unit, offering between $15 billion and $20 billion.

Pfizer would, however, continue to evaluate potential alternatives for its business. "We have not yet made a decision, but continue to expect to make one in 2018," said a company spokesman.

Walmsley, who joined GSK last year after spending 17 years at L’Oreal, was keen on acquiring the consumer healthcare business of Pfizer, but many investors in the company were reluctant to go ahead with the acquisition.

Aware about their reluctance, Walsmley last month reassured investors that her priority was to improve performance in prescription drugs. Acquisitions would follow only later, after taking into account dividends, she said.

Pharmaceutical giants such as Pfizer, Merck and Bayer have been facing problems in their consumer health business, thanks to the challenge posed by online retailers including Amazon.

Pfizer has a 2.5 per cent market share in consumer health and is the world’s fifth-largest player.