A slimmed-down GlaxoSmithKline will retain a stake in its spun-off consumer health division that it could then sell to fuel investment in its drugs pipeline, according to plans set out by the UK group’s chief executive on Wednesday.
Emma Walmsley wants GSK to hit £33bn in sales by 2031, overcoming the expiry of patents on key HIV drugs towards the end of the decade. In the next five years, the drugmaker expects to deliver annual sales growth of more than 5 per cent and adjusted operating profit growth of more than 10 per cent.
GSK will demerge at least four-fifths of its 68 per cent stake in its consumer health joint venture next year in a listing on the London Stock Exchange, but plans to keep as much as 20 per cent to monetise it in “a timely manner”.
The measure is a compromise, as some shareholders were reluctant to buy shares again in an initial public offering, while others urged the company to raise more money for mergers and acquisitions or internal drug development to bolster its pipeline.
Walmsley has been under pressure to impress investors with a vision of what the “new GSK” will look like after the spin-off of the consumer division, heightened by US hedge fund Elliott Management taking a multibillion-pound stake in the company this year.
Elliott has won some support over its concerns that Walmsley may not be the right chief executive to lead GSK.
The company has warned that it will cut its dividend after next year’s spin-off to preserve funds for investment, as it loses the cash-generative consumer unit.
The group will pay an aggregate dividend from GSK and consumer healthcare expected to be 55p together next year. The new drugmaker will pay a dividend of 45p in 2023.