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Glaxosmithkline Raises Stake in Indian Business While Reckitt Shakes of suboxone worries

From Guardian Web (February 5, 2013)

Ahead of its results on Wednesday, GlaxoSmithKline has successfully raised its stake in its Indian consumer subsidiary.

The company is paying £568m to take its shareholding in the business - whose products include Horlicks, Boost, VitaHealth vitamin drink and paracetamol tablets - from 43.2% to 72.5%. The move was part of an open offer made by the subsidiary, and Glaxo said the deal would increase its exposure to a key emerging market.

Meanwhile Nomura kept its neutral rating on Glaxo, although it said the market was expecting around £1.9bn of share buybacks this year. The bank said:

We see continuing pricing pressures in Europe and declining Advair sales, offset by expected sales of vaccines in emerging markets and Asia Pacific with the completion of multiple pre-ordered vaccine tenders.

Consensus expects 5.8% core earnings per share growth in 2013 supported by around £1.9bn of share buybacks.

Glaxo is currently 14.5p higher at £14.56.

Meanwhile Reckitt Benckiser has added 16p to £42.03, ignoring worries about increased competition for its suboxone heroin substitute. A number of competitors have written to the US Food and Drug Administration making a case against a citizen’s petition to block future versions of suboxone on pediatric concerns. Analysts at Liberum Capital said:

More importantly to us from a stock investment point of view [the letter] implies that, a) as many as eight generics companies could have filed [new drug applications] with the FDA for a generic version of suboxone, b) that eventual approval of generics by the FDA...could result in multiple generic versions of suboxone tablets entering the market at once, and c) that approval of generic suboxone tablets could actually happen soon after the FDA makes a decision on RBP’s citizen petition. In other words, middle of 2013.

The eight companies in the [group] are, Actavis, Amneal, Ethypharm, Mylan, Roxane, Sandoz, Sun Pharmaceutical, and Teva; we know three of these already market the mono generic drug but we can assume the other five plus these three may all have filed [applications] s with the FDA for a generic version of suboxone.


Posted: February 2013