GSK pledges sales boost after split from consumer arm

[June 23, 2021]  (Reuters) -New GSK, the pharmaceuticals business being separated from its consumer health operations, pledged to increase sales by more than 5% a year to 2026, the group said on Wednesday, as it published details of the split.

Investors have been waiting for details of the separation, which was first unveiled in December 2018 when GSK agreed a joint venture for consumer brands such as Sensodyne toothpaste and Advil painkillers with Pfizer.

The demerger planned for the middle of next year will allow GSK to focus on strengthening its core drugs business, which has been hit by a lack of fast-growing products and patients deferring treatments due to the COVID-19 pandemic.

Despite being the world's biggest vaccines maker, GSK has also been beaten by the likes of Pfizer, Moderna and AstraZeneca to making a COVID-19 vaccine.

GSK is currently valued at about 10.3 times its forecast core earnings, including net debt, below an average of more than 12 for global pharma majors, Refinitiv Eikon data shows. GSK's share price has fallen about 14% over the past 12 months.

At an investor day outlining its plans, GSK said the pharmaceuticals arm was expected to receive a dividend of up to 8 billion pounds ($11 billion) from the consumer business which will have its own listing on the London Stock Exchange.

As expected, the consumer arm will also take on a higher share of debt and the combined dividend of the two businesses will be reduced.

That should help to give the pharmaceuticals business in particular more scope to invest in drug development and deals. ($1 = 0.7161 pounds)

(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger in FrankfurtEditing by Mark Potter and Keith Weir)

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