GlaxoSmithKline drops plans to sell ViiV HIV drugs unit

According to the company, the decision taken to retain existing holding in ViiV Healthcare reflects on its updated strong positive outlook.

ViiV Healthcare, is a joint venture with US firm Pfizer and Japanese company Shiongi, with GSK owning about 80%.

A £1bn cost-saving program would be accelerated to deliver its full benefits a year early in 2016 with total annual benefits of £3bn from restructuring and synergies are expected to be delivered by end of 2017.

The company has also agreed to pay annual ordinary dividend of 80p for each of the next three years to 2017.

GSK chief executive officer Sir Andrew Witty said: "With the completion of the Novartis transaction, we have reviewed future prospects for the newly shaped Group, including the opportunities offered through the integration and our cash allocation strategy.

"We have done so recognising that our operating environment is shifting radically, particularly in relation to pricing and that we must be prepared for specific uncertainties, including the possible introduction of generic Advair in the US and the potential exercise of put options from partners in ViiV Healthcare and our Consumer Healthcare Business.

"For 2015, our financial performance will be impacted by the dilutive effect of the transaction and flow through of headwinds encountered in 2014.

"We then expect to see a sustained improvement in performance with revenues and earnings expected to grow in CAGR terms over the five year period 2016 to 2020 on a CER basis."

The group has also decided to reduce the planned return to shareholders from the net proceeds generated from the Novartis transaction.

Under the deal signed last year, Novartis acquired GSK’s cancer drugs business, while GSK bought Novartis’ vaccines division, while the parties have also combined their consumer health units.

Image: GlaxoSmithKline headquaters in London, UK. Photo: courtesy of Maxwell Hamilton.