At first glance it seems as ifGlaxoSmithKline(LSE: GSK) (NYSE: GSK.US) is struggling. The companys shares have underperformed the FTSE 100 by around 13% over the past five years and earnings per share have fallen by 8% over the past five years.
However, behind the scenes Glaxos management is working hard to return the company to growth and over the past 12 months, managements efforts to reignite growth have reached fever pitch.
Glaxo is unlocking value from its portfolio, selling and spinning off non-core assets and mature drugs which are reporting falling sales.
For example, the company is currently in the process of auctioning offa portfolio of prescription medicine brands in Europe and the U.S. with annual sales of around 1bn. This package of treatments is expected to fetch a value of 2bn.
Glaxo is also looking to float the HIV business it set up withPfizerfive years ago. The entity, calledViiV Healthcare, could attract a valuation of up to 15bn, making it larger thanMarks & SpencerandSainsburyscombined. Whats more, ViiV is growing rapidly with sales expanding by 18% during the third quarter of this year. ViiV has 11 HIVmedicines currently on sales with one other product inclinical trials.
Glaxo owns around 80% of ViiV and plans to float a minority stake in the company but still, this is going to be a shot in the arm for Glaxo and the companys investors.
The flotation of ViiV is part of Glaxos drive tocut 1bn of costs over the next three years. Management expects to make half of these cost savings during 2016.
Focused on growth
Glaxo is not just divesting assets, the company is shuffling its entire portfolio of treatments, in order to create a more focused business. Indeed, Glaxos three-way deal with Novartis earlier this year saw Glaxo dispose of itsportfolio of cancer drugs in order to snap up a larger share of the global vaccines market. In addition, the deal has enabled Glaxo and Novartis to form a world-leading joint ventureconsumer healthcare business.
And thats not all, as well as asset shuffling and asset sales, Glaxo is expanding.Glaxo has just signed a deal with Aspen Pharmacare Holdings Ltd, whereby Glaxo will take a 25% stake in Aspens Japanese subsidiary, as part of managements plan to boost commercial operations in Asia.
This deal is structured in such a way that leaves the door open to further deals down the road between the two companies. Aspen isAfricas biggest generic drugmaker andGlaxo is already a significant Aspen shareholder.
Only just beginning
Glaxos recent flurry of deals has set the company on a course for rapid growth over the next few years. These deals will only complement organic growth from the companys current pipeline of treatments underdevelopment.
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Rupert Hargreaves owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.