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Sizing up GlaxoSmithKline’s Consumer Healthcare Segment

Understanding GlaxoSmithKline's Valuation in 2016

(Continued from Prior Part)

GSK’s Consumer Healthcare segment

With improvements in the supply chain and successful launch of new products, GlaxoSmithKline’s (GSK) is optimistic about its Consumer Healthcare segment performance in coming years. Apart from its new products, the company has improvised its supply management in order to avoid issues facing European markets during 2014.

This segment reported growth of 44% at constant exchange rates during 2015, following the strong performance of newly acquired products including Voltaren, Otrivin, and Theraflu, as a part of joint venture with Novartis (NVS). On a proforma basis, this segment reported a growth of 6%, following increased sales of oral health and wellness products during 2015.

Consumer Healthcare performance

The consumer healthcare achieved Pro-forma sales growth of 6% during 2015, followed by the successful launch of Flonase OTC, relaunches of Excedrin and Theraflu, Oral health products under Sensodyne brand, and skincare products. Flonase OTC is a nasal spray for allergies and competes with Sanofi’s (SNY) Nasacort while Sensodyne is a leading brand of oral healthcare products by GSK. Excedrin is a migraine relief drug while Theraflu is used to treat common cold and flu. In 2014, the company’s oral health franchise faced constraints in its supply chain, resulting in the lower sales in European markets.

For newly acquired products, Voltaren, Otrivin, and Theraflu showed strong performances during 2015, growing the segment’s revenues by 44%. Voltaren, a nonsteroidal anti-inflammatory drug used in the treatment of pain or inflammation caused by arthritis or spondylitis. Voltaren has similar products like Depomed’s (DEPO) Zipsor, Iroko Pharmaceutical’s Zorvolex, and Hospira’s Dyloject. Otrivin is a nasal spray used for the relief of nasal congestion caused by allergies and sinusitis. Theraflu products are used in the treatment of various cold and flu symptoms.

In order to divest risk, investors can consider ETFs like the PowerShares International Dividend Achievers ETF (PID), which has 2.3% of its total assets in GlaxoSmithKline.

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