Drugmaker decides to retain ViiV Healthcare as part of a plan to revive performance and boost growth in emerging markets

GlaxoSmithKline has ditched plans for a multibillion-pound flotation of its HIV business as chief executive Sir Andrew Witty set out his vision for the company’s return to growth.

While other drugmakers are betting on expensive specialist drugs, particularly in cancer, Witty said GSK would focus on selling large volumes of vaccines and cheaper over-the-counter products such as Sensodyne toothpaste and the painkiller Panadol to millions of people in emerging markets. Witty believes governments in the US and Europe will continue to push for lower drug prices amid slow economic growth, declining healthcare budgets and ageing populations.

Witty said: “There are seven billion people in the world. We want to be build a company that can speak to the seven billion, not just the 500-600 million” in the US and Europe. He added: “It’s about having the right price in the right marketplace ... We don’t think it’s right to rely on high price. That’s a strategy that one day could run out of gas.”

Britain’s biggest drugmaker recently completed a $20bn (£13bn) asset swap with Novartis that involved selling its cancer division to the Swiss group, buying Novartis’ vaccines portfolio and expanding its consumer health business through a joint venture between the two companies.

Following a damaging corruption scandal in China, Witty is under pressure to show that his strategy is working. A new chairman, Sir Philip Hampton, who joined from the Royal Bank of Scotland, formally takes up his post at GSK’s annual meeting on Thursday. Hampton has been involved in the new strategy and took part in a three-hour presentation to shareholders on Wednesday.

GSK already sells the most medicines in emerging markets by volume, but ranks in third place by revenue. It has been cutting the price of asthma drugs, vaccines and many of its other main medicines in those countries.

But Witty denied that GSK would simply become a sales and marketing powerhouse, saying that research and development remained important. “We are doing more experiments than we’ve ever done.” GSK’s pharmaceutical business focuses on respiratory and HIV drugs. It also does some cancer, heart disease and diabetes drug research.

GSK said it had decided to keep its stake in ViiV Healthcare, the HIV venture, because the business had strong growth prospects. It launched ViiV with US-rival Pfizer six years ago and owns just under 80% of the business, with the rest held by Pfizer and Japan’s Shionogi.

The venture launched two new HIV medicines in the past two years, and saw sales climb 42% to £446m in the first quarter. The antiretroviral drugs are based on a compound that is more effective at reducing HIV in the bloodstream than existing therapies and has fewer side effects.

The company announced first-quarter sales up 1% at £5.6bn but core operating profit was down 14%, to £1.3bn, at constant exchange rates. It said core earnings would fall sharply this year but return to double-digit growth in 2016 and that revenues and earnings would then rise steadily until 2020.

Sales of Advair, GSK’s blockbuster asthma treatment, continued to fall. GSK said pricing pressure would continue on Advair, which could soon face competition from generics – or cheap imitations – in the US.

The company accelerated plans to cut costs by two years and has frozen its annual dividend at 80p a share for the next three years. It also scaled back a proposed £4bn return of cash to shareholders to £1bn.

Analysts at Jefferies, the stockbroker, said: “Glaxo has responded to investor concerns around the strength of the business with the reduction in the £4bn share scheme, accelerated cost-saving and abandoning the IPO of ViiV.”

Analysts at Berenberg bank said: “The outlook beyond 2016 is steady, if unspectacular.”