GlaxoSmithKline PLC (LON:GSK) was on the rise on Wednesday after Emma Walmsley presented her new strategy for the next five years, including new growth targets as the pharma giant spins off its consumer healthcare arm next year.
The FTSE 100 is targeting annual growth of 5% and 10% for sales and adjusted operating profit respectively from 2021 to 2026.
Sales are projected to reach £33bn by 2031, with £20bn coming from the new drug pipeline and strong growth from new vaccines and speciality medicines.
The forecast fills the £3bn sales hole after the loss of exclusivity over HIV medication dolutegravir in 2028.
Investment going forward will focus on core therapy areas such as infectious diseases, HIV, oncology, and immunology including respiratory diseases.
COVID-19 potential has been excluded from the sales forecast because it’s still uncertain how the pandemic will play out, but based on the upcoming readouts of late-stage vaccine trials, mRNA technology may be employed more widely in the pipeline.
Walmsley also confirmed the Consumer Healthcare business will spin off in the middle of next year as a demerger, with at least 80% of GSK's 68% holding being distributed to shareholders.
This is expected to be more tax-efficient for UK and US shareholders compared to other options, GSK said.
The consumer arm will list in London and in the US but there won’t be an IPO.
New GSK will retain up to 20% of GSK's holding in the new Consumer Healthcare company as a short-term financial investment and is eyeing an £8bn dividend from its holding.
In 2022, GSK shareholders will receive dividends from both companies amounting to 55p per share, a significant cut from the current 80p distribution.
There has been discussion that Walmsley’s background in Cosmetics at L’Oreal and at the Consumer division of GSK is not appropriate for her to lead the wider group, especially after the spinoff, but she sounded upbeat about the future of her role.
“I am a change agent, a business leader and I am very excited about the new plans for a new GSK that we're laying out today,” she said in a call to media.
"My focus is resolutely on leading us through this transformation through a successful separation."
When asked whether new investor Elliott Management had any say in the new strategy, Walmsley said she won't’ start “commenting on individual conversations” with either long-term or short-term shareholders.
“Obviously, over those last four years we've listened hard and talk regularly to all of our shareholders,” she said.
The company has also scheduled an investor update for 2pm-5.30pm BST on Wednesday.
Shares jumped 3% to 1,437.87p in the early afternoon.