The controversies  at the United Kingdom’s largest pharmaceutical company, GlaxoSmithKline, have reached crescendo point.  Once seen at the bastion of the pharmaceutical world, now rocked by criminal charges and settlements dating back to 2007 which include:  for promoting its antidepressants Paxil & Wellbutrin paying a record $3 billion in settlement, a $490 million fine after an investigation into rewarding doctors for promoting Glaxo’s drugs in China and most recently the UK’s Serious Fraud Office launching an criminal investigation into its general commercial practices.  In addition to this, their most recent set of financial figures some a drop in revenues, currently being attributed to losing the patents of their ‘wonder’ drugs and the cost of competitor drug companies making a generic version.  As you would imagine with these types of issues, this has hugely affected the share price performance: moving lower from a 2014 higher of 1700p to just 1350p, with that negative performance highlighted on comparison to the FTSE100 in general, which over the past  3 months has fallen 5%, whilst Glaxo has fallen 14%.  But could we about to see a shot in the arm for all of Glaxo ills?  This could come in the form of its join venture with Pfizer, called ViiV Healthcare, set up in 2009 to eradicate HIV.  The possible scenario is an IPO of the joint venture to crystallise the true potential of the rapid growth and expansion in the research of HIV : as such ViiV is a market leader in the area with a portfolio of 11 drugs, the most successful being Trumeq and Combivir.  At present, with ViiV making around £1 billion each year, valuations for this IPO could stretch as far as £15 billion with a time frame of between 9-12 months for the actual IPO.  For an idea of basis, that’s half the market capitalisation of British Telecom!  The trophy for a cure for HIV is obvious : other than a moral duty to eradicate such a devastating  disease, with over 35 million people living with HIV and over 30 million people having already died since the disease was first discovered ViiV/Glaxo would be seem perfectly positioned to benefit from this.


Jordan Hiscott,

Senior Trader



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