GSK revenue falls, but firm upbeat on respiratory business

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A return to growth in its key respiratory business helped shares of GlaxoSmithKline (GSK) jump Wednesday, despite the pharmaceutical company posting a 3 percent fall in full-year revenue.

Last year was a troubling one for the U.K. company, which was hit by both declining sales of its blockbuster asthma drug, Advair, and a record fine over allegations of corruption in its business in China.

The FTSE 100-listed company posted a fall in 2014 revenue to £23 billion ($35 billion) on Wednesday, but said that its respiratory business would return to growth in 2016.

GSK traded over 3 percent higher after its results were out, the biggest gainer in the FTSE 100.

"The most important thing for us to get right in the short run is our respiratory business," said CEO Andrew Witty in a presentation on Wednesday.

"If we look beyond the current portfolio, the further pipeline in respiratory re-emphasizes why we believe that we are able to be optimist about a leader in respiratory, far into the future."

Witty said that sales of Advair were likely to continue falling 2015, but trumpeted the recent approvals of GSK's new respiratory drugs, Incruse and Arnuity.

"It is our intention to build a portfolio of respiratory medicines, not to have one medicine replace Advair one-for-one," Witty said.

The company said it expected maintain its dividend per share for 2015 at 80 pence—the same as last year—and that it expected to return £4 billion of net proceeds to shareholders from its asset swap with Novartis.

The deal will see GSK sell its oncology treatments to its Swiss rival, taking over its vaccine business in exchange, and is expected to be completed in the first half of 2015.

GSK also said it would make a decision on floating its HIV drugs unit, ViiV Healthcare, in 2015a prospect it mooted back in October.

Earlier on Wednesday, U.K. media reported that GSK had hired three banks to advice on the potential IPO of the fast-growing ViiV unit, citing sources familiar with the matter.

Record China fine

Back in September, GSK was forecast to pay a $490 million fine, to settle allegations that it it paid doctors in China to prescribe its medicines. This was a record for a foreign company in the country.

Better publicity came when the company trumpeted progress in vaccinations against both Ebola and malaria.

"In both cases, GSK has the lead candidate vaccines for these two frightening diseases, "Witty said on Wednesday.

"Later in this year we should get feedback from the European regulator on the malaria vaccines and I am pleased to say that just a couple of days ago the first patients were vaccinated with our Ebola candidate vaccine in Liberia."

U.S. rival Merck also posted results on Wednesday, with earnings better than forecast. The New Jersey-based drugmaker recorded fourth-quarter earnings, excluding items, of 87 cents per share on revenue of $10.48 billion, versus analyst expectations of 85 cents on $10.5 billion in sales.