GSK is back on track after corruption scandal

GLAXOSMITHKLINE reported forecast-beating third-quarter sales, as the pharmaceuticals giant continues its convalescence following a Chinese corruption scandal.

Strong sales of treatments for HIV and vaccines against flu helped GSK report sales up 9pc to £6.1bn in the three months to September, slightly ahead of what analysts had pencilled in for the quarter. GSK also beat projections on profit, recording pre-tax earnings of £1.6bn as it kept a tighter rein on costs.

Shares in the pharmaceuticals giant ticked up nearly 4pc, gaining 53p to 1420.5p, as financial analysts digested the figures.

The improvement in sales was largely down to a 65pc surge in sales of HIV treatments and a 46pc increase in flu vaccine sales, offsetting a 9pc decline in its respiratory medicines unit.

While sales were up, a decline in profit had been expected after a complex £13bn asset swap with Swiss competitor Novartis that saw GSK concentrate on consumer healthcare at the expense of pharmaceuticals.

But chief executive Andrew Witty ( pictured) said the deal was already filtering through to the bottom line, meaning GSK expects to return to profit growth next year.

The results come with GSK under pressure from star fund manager Neil Woodford to consider hiving off key assets. His firm – Woodford Investment Management – is understood to have mooted the idea of separating its consumer healthcare unit, HIV business ViiV and dermatology division Stiefel from its bread-and-butter vaccines and medicines operation.

Investors have expressed dissatisfaction with the firm’s relatively poor share performance, which was exacerbated by a £300m fine over an embarrassing bribery scandal in China last year.

There has also been speculation that the firm would cut its dividend, a move that would be highly unusual in a sector known for delivering steady returns to investors.

But Glaxo announced a 19p third-quarter dividend and said plans for a 90p full-year payout were unchanged.

Ketan Patel, the associate fund manager at Eden-Tree Investment Management said that it would be a ‘watershed moment’ if GSK tampered with the dividend.

But he pointed out the firm’s track record in returning £63bn to shareholders since 2001.

He added that the case for a break-up of the company ‘at present appears unwarranted’.