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GSK to sell off part of its HIV venture ViiV Healthcare

And sets out new restructure programme as US Seretide sales hit
ViiV Healthcare

GlaxoSmithKline has signalled its intention to sell of part of its HIV-focused joint venture ViiV Healthcare in a move the company said would “enhance potential future strategic flexibility”.

ViiV, set up in 2009 as a partnership between GSK and Pfizer, has been growing strongly, buoyed by sales of integrase inhibitor Tivicay (dolutegravir) and the fixed dose combination Epzicom (abacavir/lamivudine).

ViiV's third quarter turnover rose by 18% to £373m, while in the first three quarters of 2014 it was up by 12% to £1bn.

The firm can expect a further boost from the recently-launched Triumeq, which gained  approval from the US FDA in August and was licensed in the EU in September.

GSK's CEO Andrew Witty said ViiV had made “very significant progress in both R&D and commercial execution”, as seen with the success of Tivicay and Triumeq.

“We believe now is the right time to explore the potential for an IPO of a minority shareholding in this business. This 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,” he added.

The comments came as GSK revealed its third quarter turnover was down 10% to £5.6bn, largely due to significant challenges to Seretide/Advair (fluticasone and salmeterol).

The COPD treatment was the fourth biggest-selling drug in 2013 but sales have since declined, thanks to rising competition, downward pricing pressure and delisting from some US pharmacy benefit management formularies.

Witty said: “The impact of formulary and contract changes we have seen this year to Advair have been greater than we anticipated and directly affected our US sales performance in the quarter.”

It's already a time of significant reorganisation for the company, following its billion dollar asset swap with Novartis, and GSK also used its third quarter announcement to outline a new 'restructuring programme'.

No job cut figures were mentioned, but the company expects to save £1bn over the next three years by 'rescaling' its pharmaceutical commercial operations, global support functions and relevant R&D/manufacturing.

“All restructuring proposals affecting headcount will be subject to employee consultation,” Witty said.

He added that initial savings from the cost-saving programme would help GSK offset some of the earnings impact from Seretide's falling sales.

Article by
Dominic Tyer

23rd October 2014

From: Sales

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