Neil Woodford is urging pharmaceutical giant GlaxoSmithKline to split up the business to reassure shareholders on the firm’s profitability, Fundweb understands.
The investment boutique is pushing GSK to explore a formal separation of the HIV business ViiV, the company consumer healthcare division, and Stiefel, its dermatology division, from the firm’s core medicines and vaccines unit.
Woodford has reportedly been holding talks with GSK’s new chairman Sir Philip Hampton on the value that such a business shake-up could bring to shareholders.
As of the end of September, the £7.07bn CF Woodford Equity Income fund held 6.12 per cent of the fund in GSK.
In an August update on its website, Woodford confirmed his confidence in GSK despite the firm’s recent declining stock performance.
It said: “A long conversation with Glaxo’s chief executive post results has allowed us to maintain confidence in the long-term investment case, despite this near term setback.”
In the latest fund update published last week, Woodford said he had increased his shareholding in GSK.
Since 2008, GSK, led by its new chief executive Andrew Witty, has been focusing on vaccines and consumer products rather than on highly priced prescription drugs, believing the strategy would bring more returns.
The chief excecutive has recently said the US drugs market faces “dramatic changes”, including increasing price inflation.
At its latest quarterly results, Witty said that a portfolio of 11 new products had brought in almost £450m in revenue to the company. The company also plans to hit £6bn in sales by 2020 from new products.