GSK - Takeout Target (BUY [HOLD], TP £17 [£16], 22 pgs)
Our analysis of GSK’s R&D performance, cost structure & pipeline has led us to a new conclusion; we believe GSK needs a strategic reset to get smaller and focus on its areas of strength (Vaccines & Virology), or an acquirer may make that decision for them. GSK is now more a “Specialty Pharma” than a “Big Pharma” which makes it a target, in our view. We identify 2 potential acquirers who could extract >£3bn of synergies and make a deal 20-40% EPS accretive. Based on our analysis, the return on Pharma R&D is -50% & we believe Oncology should be de-prioritised. Pharma R&D could generate material savings. Any savings should be invested in Virology & Vaccines where GSK is able to compete globally.For access to the full note, please contact Naresh Chouhan ( )
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