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12 November 2025
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Anybody invested in UK pharmaceutical giant GSK three years ago will have received shares in corporate spin-off Haleon when it was demerged. Assuming they still hold them; what has the company done to persuade them of its credentials as a standalone investment?
Haleon
Key stats:
- Share price: 357.9p
- Market cap: £32.5 billion
- 12-month forecast rolling PE: 18
- 12-month forecast rolling dividend yield: 2.8%
Source: Stockopedia
The consumer health business got off to an uncertain start on the stock market, lumbered with legacy issues around litigation and hefty borrowings. This is reflected in the performance of the shares, which gained around 16% since listing on the market compared with a 23% advance in the FTSE 100 index. However, it now seems to be finding its feet.
Haleon reported better than expected third-quarter organic revenue growth of 3.4% on 30 October to £2.8 billion and reiterated full-year guidance for high single-digit growth in organic operating profit.
The company’s largest division, oral health, achieved 7% organic revenue growth driven by high demand for Sensodyne and Parodontax with the former growing by high single-digits in percentage terms and gaining market share in the US and India.
Group revenue growth was evenly split between price which increased by 1.8% and volume/mix which was up 1.6%. Emerging markets generated 7% growth with India up double-digits and China up by a mid-single digit percentage.
Haleon has returned approximately £1.1 billion to shareholders in 2025, made up of around circa £500 million in share buybacks and £600 million in dividends.
What does Haleon do?
Haleon’s origins date back to 1715 when The Plough Court Pharmacy was opened in London by Silvanus Bevan. It sold directly to consumers as well as making up prescriptions for doctors.
The name Haleon was inspired by merging the words ‘Hale’ which is an old English word which means in good health and ‘Leon’, which is associated with strength.
Today Haleon has nine large-scale, multinational ‘Power Brands’ and 23 local growth brands. It operates across 170 markets around the world, and its products are used by more than one billion people.
The company is headed up by CEO Brian McNamara with the respected former Tesco chief executive Dave Lewis serving as chair, though Lewis is leaving at the beginning of 2026 to take over as chief executive at Diageo and will be replaced by senior independent director Vindi Banga.
Haleon is one of the world’s largest providers of specialist oral health products like Sensodyne, Parodontax, Polident and Aquafresh.
It manufactures respiratory products including cold and flu relief Theraflu and pain relief products including Panadol, Voltaren and Advil, not to mention its portfolio of vitamins, minerals and supplements such as Centrum.
Why did GSK spin off Haleon and how did it work?
The demerger from GSK created the world’s largest standalone consumer health company on 18 July 2022. Shareholders of GSK received one share in Haleon for every GSK share they held at the time.
For example, if you held 1,000 shares in GSK you now have 1,000 shares in Haleon and 1,000 shares in GSK. On the day of the demerger GSK shares fell to reflect the value of Haleon.
GSK later undertook a share consolidation to return its share price to a comparable level with prior periods. This reduced the total number of shares but increased the value of each individual share.
The demerger was part of a strategic shift which allowed GSK to focus on making drugs and vaccines while Haleon focused on its consumer brands such as Sensodyne and Panadol.
The consumer healthcare business was originally a joint venture between GSK and Pfizer which merged their respective consumer brands into one business. Ownership was split two thirds to one third in favour of GSK.
Both companies subsequently sold down their residual shareholdings in Haleon.
What is Haleon’s strategy?
The global consumer health sector is worth around £200 billion in annual revenues and projected to grow between 4% and 6% a year. It benefits from favourable long-term macro growth trends.
These include an ageing global population and expanding middle class in emerging markets such as India.
Over the next five years more than 90% of population growth will come from developing markets according to the United Nations while the World Health Organisation projects a doubling in the number of over-60s by 2050.
These trends put increasing strains on healthcare systems as public budgets are stretched.
At the same time consumers are becoming more educated about their health needs and turning to self-help, preventative solutions to proactively control their health.
There are three legs to Haleon’s growth plan starting with closing the incident versus treatment gap. For example, in oral health only a third of people who suffer from tooth sensitivity treat their symptoms.
Haleon believes closing just a tenth of the treatment gap could double the size of its oral health business.
Second, Haleon has a focus on innovation-led premiumisation through providing meaningful benefits and outcomes for consumers. Lastly, Haleon wants to drive penetration among lower income consumers.
The company believes the business is significantly underrepresented in this lower income cohort.
Management is also looking to step-up the operational effectiveness of its businesses and improve returns on capital – or in plain English how much it makes on the money it invests. It is running behind its peers on this metric.
The company is targeting £800 million of gross productivity savings over the next five years, which is expected to drive a 0.5% to 0.8% improvement in its gross margin. In 2024 the gross margin was 60.7%.
These are expected to be delivered by reducing complexities in legacy supply chains and inefficiencies. This involves reducing the number of packaging variations and formulations, which gives Haleon the ability to use its scale to boost its buying power.
The company believes there are clear opportunities to grow via bolt-on acquisitions in areas which increase its geographical footprint and strengthen the distinctiveness of its product portfolio.
What are Haleon’s medium-term financial targets?
The company has targeted achieving medium-term organic revenue growth of between 4% and 6% a year and recently upgraded adjusted operating profit guidance to high single-digit growth.
Alongside anticipated improvements in working capital through efficiencies management believes the business will generate ‘strong’ cash flows, which combined with disciplined capital allocation, will drive ‘strong’ EPS (earnings per share) growth and ‘industry leading’ shareholder returns.
Underlying free cash flow is expected to be enhanced by divestment proceeds as the company simplifies the business. Haleon is targeting a net debt to adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) ratio of under 2.5 times.
Dividends are expected to grow at least in line with adjusted earnings and excess capital will be returned to shareholders via share buybacks.
How competitive is the consumer health market?
The markets which Haleon operates in are very competitive and relatively fragmented with the top five players controlling between a third and 60% combined market share in most categories.
Looking across all categories Haleon holds a 7.2% market share, and the company maintained or increased its share in 71% of product categories in 2024.
Haleon’s biggest market share is in the tooth sensitivity segment where it commands 45% of the market. Its Centrum brand is the world’s largest in the multivitamin market with a 2.8% market share.
Private label operators pose a threat while major rivals such as Oral-B and Crest maker Procter & Gamble, which has a market value of $350 billion, have deep pockets with which to compete in segments of consumer health.
Colgate-Palmolive has the second largest share in sensitive toothpaste while Procter & Gamble’s Crest sensitive holds around a tenth of the market.
Based on consensus forecasts, Haleon trades on a 12-month forecast rolling price to earnings ratio of 18 times. This compares with 20.6 times for Procter and 20.1 times for Colgate-Palmolive.
How other names have followed the Haleon template
Other large pharmaceutical groups have followed in GSK’s footsteps by either spinning-off their consumer healthcare businesses or selling them to private equity. Johnson & Johnson spun off Kenvue in August 2023.
The shares jumped more than 12% on 3 November after personal care products maker Kimberly-Clark announced an agreement to buy Kenvue for $48.7 billion including debt.
The combined company would bring together brands like Huggies and Kleenex with Kenvue’s Band-Aid and Tylenol. Kimberly-Clark shares dropped around 14% on the news as investors gave a lukewarm reception to the proposed cash and share deal.
Kenvue’s shares had lost more than a third of their value since the demerger with Johnson & Johnson reflecting weakness in the core business which has attracted activist investors.
The company has also been fighting a rear-guard action after the Trump administration made claims that Tylenol used during pregnancy can cause autism in children.
French pharmaceutical company Sanofi considered spinning-off its consumer healthcare unit Opella before selling a 50% stake to private equity firm Clayton Dublier & Rice for $10 billion in cash.
German conglomerate Bayer has also considered spinning-off its consumer healthcare business which owns brands such as Aspirin, Alka-Seltzer and Canesten.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
