GlaxoSmithKline is plotting an £8bn bid to buy back division behind Beechams and Panadol

Shruti Tripathi Chopra
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GSK's first-quarter results, announced last month, were slightly better than expected (Source: Getty)

Britain's biggest drugmaker GlaxoSmithKline (GSK) is gearing up to buy out Novartis’s 36.5 per cent stake in its consumer healthcare division in an £8bn deal.

Novartis has an option to sell the stake in the divison that produces Beechams and Panadol back to GSK in March next year. The Swiss pharma group may push ahead with the deal to fund a takeover of Astrazeneca, according to the Sunday Times.

“They [Glaxo] have been consistent all along that this is a business they want to own, and will move forward when the time is right,” an unnamed investor said.

Read more: GSK’s vaccines chief will leave shortly after Witty

Last week, star City fund manager Neil Woodford dumped a £1.2bn stake in GSK calling the move “Glaxit” in a blog post.

Woodford warned that GSK's shareholders could "face a cut to the dividend".

"Over a holding period of more than 15 years, I have consistently believed that GlaxoSmithKline was capable of delivering growth and realising shareholder value. Neither has been forthcoming to the extent that I had hoped and expected," he wrote.

GSK's first-quarter results, announced last month, were slightly better than expected. Sales and adjusted earnings per share (EPS) rose 19 and 31 per cent respectively to £7.38bn and 25p.

Read more: GlaxoSmithKline names Emma Walmsley as chief executive

Analysts expected sales of £7.26bn and EPS of 24.5p, according to Thomson Reuters data.

The FTSE-100 firm's new chief executive Emma Walmsley started her role at the beginning of last month.

After announcing GSK's first quarter results, Walmsley said she hopes to boost returns in drug development.

"We'd like to have probably fewer and more focussed priorities, to have bigger launches," she said.

GSK and Novartis have not responded to requests for comment.

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