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GlaxoSmithKline to acquire Sierra Oncology through investor pressure

GlaxoSmithKline to acquire Sierra Oncology through investor pressure
GlaxoSmithKline to acquire Sierra Oncology through investor pressure

GlaxoSmithKline (GSK) plc, a U.K drug developer company agreed to acquire American cancer drug developer Sierra Oncology for USD 1.5 billion amidst continued pressure from the investor & shareholder Elliott Management.

GSK stated that the cancer drug had significant growth potential, thus they would roll out the drug by next year, with approximate revenue generated, which could be around USD 1.7 billion.

According to reliable sources, CEO of GlaxoSmithKline Dame Emma Walmsley has constantly been pushed to finalize the deal with California’s Sierra Oncology over its revenue prospects. For those unaware, Elliot Management is an active investor in GSK who has built up a considerable stake in the company since last year.

However, Elliot Management was found to have criticized GSK leaders and questioned if the company was in the right hands, given the unfinalized deal with Sierra Oncology.

GSK plans to spin off its retail consumer health business that has managed to generate huge sales, popularly known as Advil painkillers and Sensodyne toothpaste. With the U.S. expansion deal, the consumer arm will be named Haleon on London Stock Exchange which will be chaired by former Tesco head, Sir Dave Lewis.  

This spin-off for the consumer’s arm, Haleon is expected to offer around USD 7 billion which can be used for further mergers & acquisitions. It is also worth mentioning that shareholders in Sierra Oncology, a company that focuses on structural therapy to cure rare forms of cancer, will receive USD 55 per share.

A late-stage clinical study showed that Sierra’s drug helped in reducing symptoms and the need for blood transfusions.

GSK’s oncology business last year recorded around 2.8% of total pharmaceutical sales. By 2027, the company also needs to renew its exclusive HIV drug patent which will cost USD 3 billion to the company in terms of annual sales.

Source credits:

https://www.theguardian.com/business/2022/apr/13/gsk-glaxosmithkline-sierra-oncology-deal-elliott-activist-investor-cancer-drug

About the author

Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.