GlaxoSmithKline PLC will retain a 20% stake in its consumer spinoff, which the pharmaceutical company intends to list on the London Stock Exchange next year, as CEO Emma Walmsley said sales at the "new GSK" will reach £33 billion in the next decade.

Speaking to reporters after unveiling a much-anticipated strategy update June 23, the CEO said she was confident that the Brentford, U.K.-based drugs giant will be able to ride out patent expiries for one of its key HIV medicines, dolutegravir, thanks to ambitious sales projections for 11 key late-stage experimental medicines. The £33 billion target excludes any of the "very exciting" drugs in the company's early-stage pipeline or any future business development, Walmsley added.

As she reiterated her intention to stay in the top job, Walmsley laid out the foundation for growth at the "new GSK" for the immediate future and the rest of the decade — a case made all the more urgent by recent activist stakebuilding by Elliott Management Corp.

Emphasizing the strength of GSK's research and development, the CEO pointed to the 20 vaccines and 42 medicines in the company's pipeline, with 11 late-stage assets forecast to achieve peak annual sales of over £20 billion. Among these, Morgan Stanley analyst Mark Purcell highlighted the potential of HIV medicine cabotegravir, a vaccine for respiratory syncytial virus, or RSV, in older adults, Zejula in non-small cell lung cancer, and rheumatoid arthritis medicine otilimab. But Purcell said the market will need to see additional clinical data or uptake dynamics for some of the others before giving GSK full credit for such a peak sales potential.

"We are very excited and confident about delivering on this step-change in performance and growth for new GSK as I highlighted," Walmsley said on the call. "We are — we have been over the last four years — leading a transformational program of change precisely to address some perennial underperformance."

Walmsley said R&D will be focused on four key areas: infectious disease, HIV, oncology and immunology/respiratory. Following "a real step-change in productivity of our R&D organization," the CEO said GSK will continue to consider in-licensing or bolt-on deals to strengthen the pipeline, notably in oncology. Of particular interest for business development would be the 'synthetic lethality' or immuno-oncology spheres, said Hal Barron, chief scientific officer and head of R&D.

"We believe that we have one of the most exciting immuno-oncology portfolios," Barron said on the media call. The chief scientific officer suggested that GSK is unlikely to crystallize value from the sale of equity stakes it holds in biotechs including CureVac NV, Vir Biotechnology Inc., Lyell Immunopharma Inc. and soon-to-be-listed 23andMe Holding Co.

"The opportunity we have when we do business development is to create a win-win for both companies. And that's why we take these equity investments particularly when we're impressed with both the technology and the talent at these companies," Barron told S&P Global Market Intelligence.

"How we use that and how we invest that [in] new business development deals, we'll have to look at that on a case-by-case basis," Barron added. "But I think these are the kind of deals that we can expect, those that really leverage important technology, as well as leverage our focus on human genetics and the immune system."

Vaccine plans

Turning to the vaccines business, Walmsley pointed out that GSK has 16 candidates in late-stage development — including five that could potentially launch by 2026, notably its late-stage RSV vaccine. The biopharma group is looking to include messenger RNA — used for Moderna Inc.'s and BioNTech SE-Pfizer Inc.'s successful COVID-19 vaccines — as one of its technology platforms potentially by next year, the CEO said.

Elsewhere, plans to list the spinoff consumer business will result in GSK holding on to a 20% stake in the unit in the short term, which Morgan Stanley estimates could raise up to £5 billion when off-loaded. GSK also announced a higher-than-expected dividend for 2022 of 55 pence, dropping back to 45 pence from 2023 — beating consensus expectation of 37 pence — for the new biopharma business. Walmsley predicted sales growth of 5% in the next five years and adjusted operating profit of 10% at the U.K.'s second-largest pharmaceutical company.

After recent stake-building by U.S. activist investor Elliott Management heaped greater scrutiny on GSK's strategy plans, Walmsley's focus remained on communicating "this most important corporate shift for 20 years" and refused to be drawn on shareholders. Still, she was unwavering in defense of her continuing role as CEO.

"I am a change agent. I am a business leader. And I am very excited about the new plans for new GSK that we're laying out today," she said. "My focus is resolutely on leading us through this transformation through a successful separation and with momentum beyond that."