GSK announced this morning that it has concluded a strategic agreement with Dong-A of South Korea. As with the deal that GSK did with Aspen last year, there are various elements to the agreement, one of which involves GSK taking a 9.9% equity stake in Dong-A at a cost of £73.9m. On the marketing side, the two companies will co-promote a portfolio of primary care products to doctors (Dong-A will set up a new division to handle this) and look at further opportunities in South Korea. The co-promoted products (which will come from both companies) will be subject to a profit-sharing agreement once sales go above an agreed threshold.
In the short term, the impact of this transaction on GSK’s P&L will be minimal, but the fact that GSK now has a stake in the largest generics and OTC company in Korea gives it the potential to do a lot more in future, should its strategy move away from alliances to acquisitions. It will also deter foreign generics companies from using Dong-A as a partner, making life a bit more difficult for the generic industry as a whole.