GlaxoSmithKline's streamlining of its consumer healthcare business will result in the divestment of £500 million worth of over-the-counter products, the most eye-catching being the controversial weight loss drug Alli.
The move, initially touted in February, is part of GSK's decision to concentrate on a portfolio of "fast-growing priority brands and the emerging markets" in the division. The products to be divested, which are primarily sold in Europe and the USA, made up 10% of the company’s total consumer healthcare turnover.
They include analgesics such as Solpadeine, the vitamin and supplement product Abtei, the ulcer treatment Zantac (ranitidine) OTC and Alli (orlistat).
The latter is marketed under prescription by Roche as Xenical and both products had their labels changed by the US Food and Drug Administration in May last year to include safety information about cases of severe liver injury that have been reported rarely with its use. The update was made based on a review which identified 12 reports of severe liver injury among people taking Xenical and one report in Alli users between April 1999 and August 2009. This is out of an estimated 40 million people worldwide who have taken orlistat.
Calls for orlistat removal, GSK backs safety
Interestingly, GSK's announcement came on the same day that influential US consumer group Public Citizen petitioned the FDA asking that Alli and Xenical be removed from the market immediately. The group bases its claim on the liver problem but also on new information obtained from FDA adverse reaction files that the drugs have been associated with 47 cases of acute pancreatitis and 73 cases of kidney stones.
"Any one of these serious risks alone would be sufficient basis for banning Xenical and Alli,” said Sidney Wolfe, director of Public Citizen’s Health Research Group. “These drugs have the potential to cause significant damage to multiple critical organs, yet they provide meagre benefits in reducing weight loss in obese and overweight patients".
In April 2006, Public Citizen urged a ban of Xenical because research in rats had demonstrated that orlistat caused the formation of pre-cancerous lesions in the colon. The FDA rejected that petition.
In response, GSK noted that Alli is safe and effective when used as directed and more than 10 million have taken the only FDA-approved OTC weight loss product. The company claimed that the safety of orlistat has been established through 100 clinical studies involving more than 30,000 patients.
Strong heritage, lack of focus
Back to the divestments and GSK noted that individually the brands "have strong heritage and good prospects", but the firm has l"acked sufficient critical mass in some product categories and certain brands have lacked focus due to other global priorities". As such, it therefore believes other companies "are better placed to maximise the potential they offer".
The process of communicating with interested parties will begin over the next few weeks, with the aim of divesting the products by late 2011, "subject to interest and realising appropriate value for shareholders". Chief executive Andrew Witty said consumer healthcare "is a key growth driver for GSK" but "it is important that we focus this business around product categories, brands and markets where we have most depth and competitive advantage, with the best prospects for strong growth".