Global Processing

Glaxo buys Stiefel Laboratories for $2.9 billion

April 21, 2009
According to the Associated Press, British drugmaker GlaxoSmithKline PLC will pay $2.9 billion to buy U.S. dermatology business Stiefel Laboratories Inc. GlaxoSmithKline will also assume $400 million in debt and has agreed to a further payment of up to $300 million depending on performance, bringing the total cost of the deal to up to $3.6 billion. For Glaxo, it''s the second midsize deal in less than a week. Late last week, Glaxo and No. 1 Pfizer Inc. said they are combining their HIV businesses to create a new company. They will vault to the No. 2 market position, putting up $373 million in initial capital. Privately owned Stiefel, the world''s biggest independent dermatology company, makes prescription and over-the-counter medications including acne treatments and other skin creams, lotions, washes and vitamins. The Coral Gables, Fla., company put itself up for sale earlier this year, and reportedly had drawn interest from Johnson & Johnson and Novartis AG as well as Glaxo. Glaxo has been moving to replace falling sales of older drugs facing generic competition by diversifying. The drugmaker has said it will lose about $5 billion worth of sales as demand falls for treatments. The deal, set to close in the third quarter, is expected to bring pretax cost savings of up to $240 million annually by 2012, mostly from cutting manufacturing and administrative jobs. That will initially be offset by integration costs of about $325 million over the next three years. Glaxo said its existing prescription dermatological products would be combined with Stiefel''s and sold under the Stiefel brand. Stiefel''s leading products include Duac for acne, Olux E for dermatitis and Soriatane for severe psoriasis. Stiefel''s sales in 2008 were approximately $900 million, while Glaxo''s sales of dermatology products -- Altabax, Bactroban and Cutivate -- was around $550 million, the company said. The combined business would have an 8 percent share of the prescription dermatology market globally. Charles Stiefel will remain chief executive and chairman of Stiefel until the deal closes, and then will lead the business unit for Glaxo.