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GlaxoSmithKline targets growth across units, scraps ViiV IPO

[LONDON] GlaxoSmithKline laid out growth targets for its biggest businesses on Wednesday, hoping to convince investors that focusing on consumer health and vaccines would return the drugmaker to long-term growth.

It also scrapped plans to float its HIV drug business ViiV Healthcare, citing its strong outlook.

Chief Executive Andrew Witty is under pressure to prove to investors that a US$20 billion-plus asset swap with Novartis can revive GSK's fortunes, following a damaging slide in lung drug sales and a major corruption scandal in China.

Britain's biggest drugmaker said it expected group sales to rise by a low-to-mid single digit percentage rate annually to 2020. Its pharmaceuticals, vaccines and consumer health businesses would increase annual sales by low single digits, mid-to-high single digits and mid single digits respectively, it added.

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In a bid to protect its dividend, GSK also said it was scaling back plans to return 4 billion pounds (S$8 billion) of cash flowing from the Novartis transaction to investors and would instead pay 1 billion pounds as a special dividend.

GSK is showcasing its new divisional structure at an investor day, alongside first-quarter results, which showed a fall in earnings per share, hit by declining sales and prices for its profitable Advair lung drug in the United States.

Quarterly sales were 5.62 billion pounds, unchanged from a year earlier in sterling terms. Core earnings per share (EPS) - the measure followed most closely by investors - were down 18 per cent at 17.3 pence.

Analysts, on average, had forecast sales of 5.62 billion pounds and core EPS, which excludes certain items, of 17.4 pence, according to Thomson Reuters.