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Published on 16/04/2018 1:02:43 PM | Source: Motilal Oswal Securities Ltd

Neutral Glaxo SmithKline Consumer Healthcare Ltd For Target Rs.6,350.00 - Motilal Oswal

GSK plans strategic review of India business

Details hazy, but board meeting on 28th March may provide more clarity

In a press release, GlaxoSmithKline – the parent company of GSK Consumer India – announced that it is initiating a strategic review of some of its businesses in India. The company also organized an investor call, wherein, among other things, it shared some details on the India business review plan. Key takeways.

Relevant points for India business from the press release

* GSK is initiating a strategic review of Horlicks and its other consumer healthcare nutrition products business to support funding of the Novartis transaction, and to drive increased focus on the over-the-counter (OTC) and oral health categories. Combined sales of these products were ~GBP550m in 2017.

* India is the biggest market for Horlicks and other nutrition products. Notably, the Horlicks range is widely recognized as premium nutrition products. In India, these products are sold by GlaxoSmithKline Consumer Healthcare, a public company listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The strategic review will include assessment of GSK’s 72.5% shareholding in the company.

* GSK expects the outcome of the strategic review to be concluded by end-2018. There can be no assurance that the review process will result in any transaction. Relevant points for India business from the call

* Even after the possible sale of Horlicks and other nutrition products business, India will remain an important market for OTC and pharma.

* Clarity about any possible deal might emerge by the middle of the year.

* Horlicks and other nutrition products generate combined sales of ~GBP550m in India (overall India sales are likely to be GBP470m in FY18, of which Horlicks and extension sales are expected to be ~GBP330b).

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