Investors push GSK to consider break-up

BRITAIN’S largest drug maker Glaxosmithkline is thought to be considering a break-up after facing pressure from some of its shareholders to focus on its pharmaceuticals operations.

The Daily Telegraph understands that questions are being raised by some of GSK’S shareholders over the structure of the group, in the run-up to its pharma R&D update and second quarter results next week. “Our No.1 priority for the group is improving performance in the pharmaceutical business, especially pharma R&D and next week we will set out our new approach to R&D,” a spokesman said.

“We believe the three business structures of the group offer significant opportunities in the current healthcare environment and provide the group with more stability to our earnings and help in free cash flow generation. But as we have consistently said, this is subject to each business continuing to perform competitively and having access to capital.”

Speaking to The Financial Times, which first reported on the investor discussions, several top-10 shareholders urged a shake-up of operations, with one saying: “The logic of [splitting] the business is pretty clear... The financial dynamics of consumer and pharma are pretty different.”

Another told the newspaper: “It has been a question on the table for a long time. We have been asking, ‘What are you? Are you pharma? Are you consumer goods’? Emma [Walmsley, chief executive] came in with a fresh pair of eyes – there is potential for thinking that [a spin-off ] would make sense.”

Last year, GSK’S pharmaceuticals business accounted for just over 50pc of sales, vaccines generated 17pc of total revenue, and consumer healthcare, 25pc. GSK this year bought out Novartis’ stake in its consumer healthcare unit in a $13bn (£9.2bn) deal, which would make it easier to spin off.