GlaxoSmithKline (GSK) and Pfizer have agreed on a merger of their consumer healthcare divisions to create a new business with annual sales of approximately $12.4bn.
The result of the merger would be GSK, a UK pharmaceutical firm and creator of Aquafresh, Panadol and Beechams cold and flu remedies, will own 68% of the new business while Pfizer, a US-based company best known for producing Viagra, will control the rest.
GSK also outlined its plans to create two separate UK pharmaceutical businesses within three years of completing the deal, one with a focus on pharmaceuticals and vaccines and the other within the consumer healthcare sector.
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Commenting on the merger, Emma Walmsley, chief executive at GSK, said: "18 months ago, I set out clear priorities and a capital allocation framework for GSK to improve our long-term competitive performance and to strengthen our ability to bring new breakthrough medicines and better healthcare products to people around the world."
She added: "The transaction we have announced today is a unique opportunity to accelerate this work.
"Through the combination of GSK and Pfizer's consumer healthcare businesses we will create substantial further value for shareholders."
GSK has claimed that the merger will result in savings of £500m ($630bn) by 2022 but acknowledged that there will be job losses as a result. "Obviously, there's going to be some impact on people," stated Walmsley.