GSK Profit Falls; Plans Partial IPO Of ViiV Business - Update

(RTTNews) - GlaxoSmithKline plc (GSK, GSK.L) on Wednesday reported a decline in third-quarter profit, hurt by lower demand for pharmaceutical products - mainly respiratory drug Advair, and weakness at consumer healthcare business.

Glaxo also announced restructuring of its pharmaceutical business, citing pricing pressure in the respiratory business. The drug maker is also considering a partial IPO of the ViiV healthcare business, in which it owns 78 percent stake, Pfizer Inc (PFE) 12 percent and Shionogi & Co 10 percent.

Glaxo also announced a cost-cutting program aimed at saving an annual 1 billion pounds within three years.

The company said it continues to expect full year core earnings per share on CER and ex-divestment basis to be broadly similar to 2013.

Glaxo posted quarterly net earnings to shareholders of 401 million pounds or 8.2 pence per share, compared with 969 million pounds or 19.7 pence per share last year.

Core earnings for the quarter were 27.9 pence per share, compared with 28 pence per share a year ago.

Profit before taxation for the quarter dropped to 548 million pounds from 1.4 billion pounds last year.

Revenues for the third quarter slid to 5.65 billion pounds from 6.51 billion pounds in the prior year.

At its pharmaceuticals business - respiratory segment sales slid 8 percent to 1.4 billion pounds, mainly on a 13 percent drop in sales of Seretide/Advair. Oncology sales jumped 35 percent, Cardiovascular, metabolic and urology fell 5 percent. Other pharmaceuticals sales slid 8 percent and established products sales fell 14 percent. Sales at ViiV Healthcare gained 18 percent.

Sales in vaccines business were flat at 922 million pounds. Sales in consumer healthcare business fell 3 percent to 1.07 billion pounds.

For the quarter, the company maintained a dividend of 19 pence per share and expects the full year dividend to grow 3 percent to 80 pence. For 2015, the drug maker expects to maintain the dividend at the same level as in 2014.

The company also plans to return 4 billion pounds to shareholders in 2015 following completion of its deal with Novartis.

In April, Glaxo announced a three-part inter-conditional deal with Novartis AG involving its Consumer Healthcare, Vaccines and Oncology businesses. Glaxo and Novartis will create a new Consumer Healthcare business over which Glaxo will have majority control, with an equity interest of 63.5 percent.

Glaxo will also acquire Novartis' global Vaccines business (excluding influenza vaccines) for an initial cash consideration of $5.25 billion with subsequent potential milestone payments of up to $1.8 billion and ongoing royalties. GSK will divest its marketed Oncology portfolio, related R&D activities and rights to its AKT inhibitor and also grant commercialization partner rights for future oncology products to Novartis for an aggregate cash consideration of $16 billion, of which $1.5 billion depends on the results of an ongoing clinical trial.

GlaxoSmithKline named Moncef Slaoui, an executive director, as chairman, Vaccines, with immediate effect. Slaoui was previously chairman, Global R&D and Vaccines.

In London, Glaxo closed Wednesday at 1,377.00 pounds, up 35.00 pounds or 2.61%, on a volume of 20.2 million shares.