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Haleon has agreed to sell its nicotine replacement therapy business outside the US for £500mn, the latest in a string of disposals of its slower-growth brands since the consumer health group was spun off from GSK two years ago.
The sale of the non-US smoking cessation brands, which include Nicotinell and Thrive, to a unit of Indian pharmaceutical group Dr Reddy’s Laboratories is part of Haleon’s strategy to pay down debt and focus on higher-growth categories such as toothpaste, vitamins and supplements.
Last year, Haleon, which manufactures Sensodyne toothpaste and Panadol painkillers, sold athlete’s foot cream brand Lamisil to Sweden’s Karo Healthcare for £235mn. Earlier this year it sold lip balm brand ChapStick to private equity group Yellow Wood Partners for $430mn.
Chief executive Brian McNamara said the divestment was “a further example of Haleon being proactive in managing its portfolio and is consistent with our strategy as we implement change to become more agile and competitive”.
“Whilst this business has great brands, these are not core for us, but I’m sure they will continue to flourish given the focus and capability of Dr Reddy’s,” he added.
The smoking cessation business outside the US, which also includes Nicabate and Habitrol, available in gum, lozenge and patch forms in 30 markets, generated £217mn in revenues and £110mn in profits in 2023.
Haleon said on Wednesday that the divestment would dilute its full-year revenue by approximately 0.5 per cent, and its adjusted operating profit by 1 per cent.
Dr Reddy’s will make an upfront cash payment of £458mn, with a further performance-based payment of up to £42mn next year and into the first half of 2026.
The transaction is expected to be completed in the fourth quarter of this year.
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