GlaxoSmithKline plc (ADR) (NYSE:GSK) Sees Diminishing Returns In HIV

GlaxoSmithKline plc (ADR) (NYSE:GSK) Sees Diminishing Returns In HIV

GlaxoSmithKline plc (ADR) (NYSE:GSK)’s Chief Strategy Officer, as well as, the chairman of its AIDS treatment unit, ViiV Healthcare Ltd, David Redfern, said that the returns are diminishing in HIV. However, he said that the industry must be given its due credit for taking away the fear of the late 1980s and the threat of death. The company’s drug for HIV, which is to taken once a day, is also demonstrating effectiveness in restricting the virus.

Quit HIV

Bloomberg reported that the success of HIV unit could mean that GlaxoSmithKline plc (ADR) (NYSE:GSK) might take a call to quit the division. The company is foreseeing the day when the unit will not have any purpose probably in a decade. Interestingly, its drug on HIV is regarded as the most profitable segment for it.

The company believes that there is less room for improving the effectiveness of the drug. That is because both its drug and Gilead Sciences, Inc. (NASDAQ:GILD)’s drugs are providing better results in defeating the HIV. Also, the existing medicines will likely lose the patent protection commencing from the year 2026. Therefore, the focus will shift towards improving the market share by projecting the drug’s positive side like minimum side effects.

Bright Spots

There was little doubt that ViiV is a bright spot of GlaxoSmithKline plc (ADR) (NYSE:GSK). The division’s profit is over 25% of the parent firm’s total operating profit in 2014. Pfizer Inc. (NYSE:PFE) and Shionogi & Co. are having a stake of 22% in ViiV. The British drug maker was one among the top ten pharmaceutical companies in the world.

In May, GlaxoSmithKline plc (ADR) (NYSE:GSK) dumped the partial spin-off idea and reiterated its commitment to the segment. That was because investors forced the firm to retain the existing structure. The company was also ready with a potential IPO before dropping it seven months later. Redfern said that the prospects of ViiV got even stronger during the period.

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