Fitch affirms GlaxoSmithKline

Fitch Ratings said it affirmed GlaxoSmithKline plc's senior unsecured and issuer default ratings at AA and its short-term rating at F1+.

The outlook remains stable.

The agency said the ratings reflect GlaxoSmithKline's impressive diversification, its excellent market position as the number two pharmaceuticals company in the world, its successful research and development activities as evidenced by the good growth of its product portfolio and full product pipeline, and its high EBITDA margin of 36% at the end of 2005.

Conversely, the ratings are constrained by around $3.1 billion of cash costs arising from a recent settlement of the company's transfer-pricing tax dispute with the U.S. Internal Revenue Service and by the company's shareholder-friendliness, Fitch said. GlaxoSmithKline has a history of large share repurchases, which accounted for around £1 billion of cash outlays in each of the past three years.

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