GSK to acquire Stiefel to form specialist dermatology business

GlaxoSmithKline plc (GSK) has agreed to acquire Stiefel Laboratories Inc. in a deal valued at up to $3.6 billion, including a potential future performance-based payment. The transaction will merge GSK's existing prescription dermatology products with Stiefel's portfolio to form a new global specialist dermatology business operating under the Stiefel brand within the GSK Group.

The combined entity is projected to generate approximately $1.5 billion in revenue based on 2008 pro forma figures, representing about 8% of the global prescription dermatology market. GSK expects this acquisition to strengthen its strategy of growth and diversification through targeted acquisitions. The deal is anticipated to yield annual pre-tax cost savings of up to $240 million by 2012, with integration costs estimated at $325 million over the next three years.

Stiefel's product range includes treatments for acne, dermatitis, and psoriasis, such as Duac and Olux E. GSK's key dermatology brands include Bactroban and Cutivate. The new business will benefit from GSK's global commercial infrastructure and manufacturing capabilities, particularly in emerging markets. Stiefel's products will also gain from GSK's distribution network, while GSK's products will leverage Stiefel's specialized sales force and established relationships with dermatologists.

The combined business is set to have a robust development pipeline with over 15 projects in late-stage development. Charles W. Stiefel is expected to continue as CEO and Chairman of the new business following the transaction's closing, which is anticipated in the third quarter of 2009, pending regulatory approvals.