GSK abandons sale of older drugs portfolio

British pharmaceutical giant GlaxoSmithKline (GSK) has dropped plans for a multi-billion-dollar sale of a portfolio of older drugs sold in North America and Europe after having received interest from several private equity firms and generic drug makers.

''The company has evaluated all bids received and has concluded, consistent with its key criteria of maximising shareholder value, not to pursue divestment of these products," it said in a statement.

GSK, Britain's biggest drug maker, had said in its 2nd quarter results in July, that it has started a process to consider the divestment of certain North American and European brands in its Established Products Portfolio. These drugs are expected to have 2014 sales of about £1 billion.

Its Established Products Portfolio, which has drugs like heartburn drugs Tagamet and Zantac, Imitrex for migrane, Zofran for nausea and antidepressant drug Paxil, generate lower revenues since they no longer have market exclusivity due to patent expiration.

According to some media reports, private equity firms like Apollo, Advent International, Blackstone and KKR along with other small generic drugmakers had shown interest in buying GSK's portfolio of older drugs, which could have fetched more than $3 billion.

London-based GSK, which is struggling with declining sales, is currently restructuring itself in order to boost profits. It pledged in October to cut costs by $1.57 billion over three years, with half the savings coming in 2016.

Yesterday it announced 900 job cuts in the US, where it is struggling to sell respiratory medicines. (See: GlaxoSmithKline's $1.57-bn restructuring to hit US jobs)

Like its rivals, GSK is facing the loss of patent protection on some of its best selling drugs and has to bring in new drugs to regain the profitability it posted last year.

Sales in the first half of 2014 were worse than expected after revealing a turnover of £5.6 billion, down 4 per cent from the same time last year, and core earnings down 12 per cent.

In July, CEO Andrew Witty admitted that the company is now unlikely to deliver sales growth this year, after having forecast in April that core earnings growth would be around 4-8 per cent for the current financial year.

The company is also navigating through several bribery scandals in China and several other countries, which could result in criminal convictions for some of its employees as well as huge fines from the Chinese, the US, the UK and regulators from other countries.