Troubled pharma giant GlaxoSmithKline (LON:GSK) was a top performer Wednesday afternoon after announcing plans to spin off its HIV treatment business, ViiV Healthcare.
ViiV was created five years ago in partnership with Pfizer and Shionogi, and has successfully launched antiviral medication Tivicay and prescription medicine Triumeg.
Glaxo believes the time is now right to hive off a minority shareholding in the business through a stock market listing, as it will “provide greater visibility of the intrinsic value we see in its currently marketed assets and future pipeline and also enhance potential future strategic flexibility”.
As a standalone company, ViiV would waltz its way into the FTSE 100, assuming it is listed in London.
In the first nine months of the year, ViiV had turnover of £1.04bn and had an operating profit of £675mln.
Meanwhile, the company said the three-part US$16bn cancer/vaccines asset swap with Novartis is on track to complete in the first half of next year; after which the company plans to return US$4bn to shareholders.
Glaxo also maintained its quarterly dividend at 19p in its third quarter results and flagged an 80p pay-out for the full year and also for 2015.
For the three months to September sales were 3% lower year-on-year at US$5.6bn while core earnings per share beat expectations with a 5% rise to 27.9p.
Andrew Witty, chief executive, said asthma treatment Advair in particular had faced tougher than expected competition in the US, which had offset strong sales growth in emerging markets, Japan and from ViiV Healthcare.
The pharma giant has been dogged by a bribery investigation in China and the concerns over Advair, and Witty said it would address its cost base following the divestment of the cancer division and the challenges in the US respiratory market.
Around £1bn of new annual cost savings are expected over the next three years, with around 50% delivered in 2016, he added.
A pivotal element of Glaxo’s new focus will be to strengthen its Vaccines and Consumer Healthcare operation. Upon completion, around 40% of revenues will be generated from products in these areas.
Markets liked the statement and shares rose 3.6% to 1,390p.