Firm aims to boost pharmaceutical and vaccine business by 5% annually for five years<\/p>\n
GSK has cut its dividend to invest in research and set ambitious sales targets as its under-pressure chief executive, Dame Emma Walmsley, pledged to lead Britain\u2019s second biggest drugs maker through a corporate shake-up next year.<\/p>\n
GSK is spinning off its consumer healthcare business and aims to increase sales at the remaining pharmaceuticals and vaccines business, provisionally called \u201cNew GSK\u201d, by 5% annually over the next five years. <\/p>\n<\/p>\n
It intends to raise sales to \u00a333bn by 2031, which is almost as much as the \u00a334bn achieved by the whole group, including consumer health, last year. Profits are projected to grow by 10% a year until 2026.<\/p>\n
Investors were braced for a steep dividend cut, from 80p a share this year, but will receive a better-than-expected 55p a share in total dividends next year from GSK and the new consumer business. The dividend for \u201cNew GSK\u201d will start at 45p in 2023. <\/p>\n
Money saved by the dividend cut will be invested in research and development to strengthen the firm\u2019s pipeline of new drugs.<\/p>\n
The targets and dividend change were presented at a live video presentation to investors on Wednesday against a backdrop of speculation over Walmsley\u2019s future. <\/p>\n
The New York hedge fund Elliott Management, which took a sizeable stake in GSK in April to push for change, has reportedly questioned whether Walmsley is the right person to lead New GSK.<\/p>\n
Speaking ahead of the meeting, Walmsley said:\u201cLet me tell you what I am. I am a change agent, I am a business leader and I am very excited about the new plans for a new GSK that we are laying out today. I have been leading and driving very hard a shift to a more performance oriented company \u2026 My focus is resolutely on leading us through this transformation, through a successful separation and with momentum beyond that.\u201d<\/p>\n
GSK is demerging at least 80% of its stake in the consumer healthcare venture in mid 2022, with the rest to be sold off when market conditions allow. <\/p>\n
Walmsley said this was set up to be \u201cvery, very, shareholder friendly\u201d. Existing GSK shareholders would receive shares in the new consumer company with brands such as Panadol, Sensodyne and Voltaren, which will be listed in London and New York. Some analysts had advocated an initial public listing to raise money.<\/p>\n
Walmsley highlighted the achievements made since she inherited a threadbare drugs pipeline four years ago, including a 30%-plus boost in R&D spending, producing a pipeline of 20 vaccines and 42 medicines.<\/p>\n
\u201cI\u2019m very aware that GSK shares have underperformed for a long period,\u201d she said. \u201cThe transformation achieved over the last four years creates a completely different platform for growth and significant shareholder value.\u201d<\/p>\n
The GSK share price rose as much as 3.5%. Prior to Wednesday, ithad fallen 16% since Walmsley took over in April 2017. <\/p>\n
Mike Fox, senior fund manager at Royal London Asset Management, a GSK shareholder, said: \u201cThis updated strategy moves the needle at GlaxoSmithKline, from a focus on restructuring to a story driven by growth. The targets show that management are prepared to be accountable for this growth, driving an improved shareholder experience, and we look forward to working with them to deliver it.\u201d<\/p>\n
The company is aiming for high-single-digit percentage growth in vaccines and double-digit growth for specialist medicines over the next five years.<\/p>\n
Peter Welford, an analyst at Jefferies, said the group needed \u201cto build belief in the pipeline\u201d. The firm focuses on cancer, immunology, respiratory drugs and infectious diseases, as well as vaccines. <\/p>\n
GSK has also developed a long-acting, injectable HIV drug, whose main ingredient can also be used to prevent HIV infection. Known for its shingles, cervical cancer and flu vaccines, it is also developing vaccines for meningitis and RSV (respiratory syncytial virus), a common virus that can lead to hospitalisation for adults. It estimates that the RSV vaccine market for adults is worth \u00a35bn a year.<\/p>\n