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GSK CEO says no short-term plan to divest HIV unit

Published 05/05/2011, 01:11 PM
Updated 05/05/2011, 04:33 PM
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* No immediate spin-off on horizon for ViiV Healthcare

* Joint company established with Pfizer in 2009

By Ben Hirschler

LONDON, May 5 (Reuters) - GlaxoSmithKline has no immediate plans to spin off an HIV drug company created in 2009 with Pfizer, though it is "open-minded" about the unit's long-term position, GSK's chief executive said on Thursday.

"There's nothing in the short term that we've got planned. We're very happy with what we've got at the moment and we're focused on making it work," Andrew Witty told reporters after the company's annual shareholder meeting.

Speculation that the two drugmakers might launch an initial public offering (IPO) for their ViiV Healthcare business -- which is 85 percent owned by GSK -- has increased recently as new Pfizer boss Ian Read considers divesting some operations.

Read said on May 3 he would provide rough outlines by the year's end on what Pfizer might sell or spin off.

The creation of ViiV in November 2009 marked an unusual drug industry collaboration because of the way in which it pooled GSK and Pfizer's HIV/AIDS operations into a new business.

The current structure, however, could easily form a stepping-stone to a fully independent business, which some analysts believe might be better placed to take on Gilead Sciences, the market leader in HIV medicine.

Analysts at Morgan Stanley said in a research note last month they saw strong operational and valuation benefits if GSK were to accelerate the potential demerger or IPO of ViiV, calculating such a move would enhance earnings growth at GSK.

Witty said he was receptive to rethinking ViiV's role within the group in the long term, even though it was currently making good progress.

"Let's see where we go in the future in terms of long-term corporate structure. Obviously, we've got all sorts of options," he said. "As we've demonstrated all over the place since I've taken over, we're prepared to do what creates the best value for shareholders ... we're very open-minded." (Editing by Jon Loades-Carter)

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