GlaxoSmithKline is planning to turn its HIV treatments into a standalone company floated on the stock market, where it could be high up in the FTSE 100 index.
The business would be worth up to £15bn thanks to the rapid growth in the number of HIV treatments the company has been launching recently.
While Glaxo has been working on HIV cures for decades, chief executive Andrew Witty set the team up as a standalone operation based in Brentford, Middlesex five years ago.
Now, with profit likely to come in this year at about £1bn, it is big enough to be in the top third of the Footsie.
Currently called ViiV Healthcare, Glaxo owns 78.3 per cent of the operation, while Pfizer and Japan’s Shionogi own the remainder.
It is not clear yet whether the other two drug companies would sell their stakes or retain them in the flotation, but given this year’s successful launch of new medicines like the Tivicay one-a-day tablet, they are likely to retain part of their stakes to benefit from future growth.
Glaxo would only sell part of its stake.
Video: Catch up with all the latest business news below
Mr Witty said: “This is a business right in the middle of what looks like one of the most successful new product launches in the category. It would immediately be a very substantial presence within the FTSE 100 and we think that that has the opportunity to create significant value for GSK shareholders.”
For much of the 1990s Glaxo faced criticism for the high prices it charged poor African countries for HIV anti-retrovirals. In 2000 it took legal action against Ghana for buying cheaper versions of its treatments from an Indian maker of copycats. But it has since taken a more conciliatory stance, offering cheaper versions itself.
Glaxo announced the HIV flotation plan along with a wider reorganisation that will see major job cuts around the world. The UK is not likely to be affected but Mr Witty wants to cut £1bn of costs.
He also reported Glaxo’s turnover fell 14 per cent to £16.8bn in the first nine months of the year. Operating profit fell 37 per cent to £2.9bn.
Mr Witty brought forward by a few weeks the hoped-for launch date for its Ebola vaccine. He said having started trials on humans six weeks ago, initial supplies should be available before the end of the year. However, there will not be enough to cover much more than the treatments of doctors and nurses helping control the outbreak.
In China, where Glaxo is still reeling from the embarrassing bribery scandal after being recently fined nearly $500m, sales returned to growth, but it was stung by a major slump in sales of asthma drug Advair, and generic competition elsewhere.
The quarterly dividend was kept unchanged at 19p, despite fears it would be cut.Reuse content