He will also give up all his executive responsibilities from the end of Glaxo's current financial year on 30 June. Between June and November he will act as chairman in a non-executive capacity.
The move leaves power in the hands of Sir Richard Sykes, chief executive. Sir Paul's successor will be a non-executive chairman.
Likely candidates include board members, including Sir John Cuckney, chairman of Royal Insurance, who is Glaxo's vice chairman, Lord Kingsdown, the former Bank of England governor, and the politician Lord Howe.
Sir Paul said it had been a privilege serving Glaxo for more than 30 years. But he signalled that the fast-changing market for health care had led to his decision to go early. He could have stayed until his 70th birthday in two years.
'It is time for change and for a change to those who have the task to guide our splendid group to greater heights,' he said.
Analysts said his departure marginally increased the likelihood that Glaxo would tie up a billion- dollar deal to buy either McKesson, the US drug distributor, or PCS, its pharmaceutical benefit manager. Sir Paul has long been opposed to acquisitions.
The shares rose 22p to 585p.
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