GLAXOSMITHKLINE and Swiss rival Novartis are to create a consumer healthcare powerhouse as part of a string of deals in the pharmaceuticals sector.

The tie-up will create a world-leading business with annual revenues of about £6.5bn from Glaxo products such as Aquafresh and Beechams and cough and cold brand Tixylix from Novartis.

In addition, Glaxo, which employs 1,000 staff at its factory in Barnard Castle, is selling its oncology portfolio and related research and development activities to Novartis for up to £9.5bn and buying the Swiss firm’s vaccines business for an initial £3.1bn.

Separately, Novartis is to sell off its animal health division to Lilly for about £3.2bn and also plans to sell its flu business.

The three-part transaction involving Glaxo and Novartis is expected to complete during the first half of next year and will result in a £2.4bn return of capital to Glaxo shareholders.

Novartis employs more than 3,000 people across nine sites in the UK, including at its regional headquarters in Frimley, Surrey. Glaxo’s main consumer healthcare sites are at Maidenhead, Berkshire, and Weybridge, Surrey.

Glaxo chief executive Sir Andrew Witty said: “Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce.

“With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.”

Glaxo shares opened five per cent higher yesterday following the announcement, while rival AstraZeneca was up eight per cent in the wake of speculation that it is in the takeover sights of US rival Pfizer.

Glaxo shares have fallen in recent weeks due to ongoing concerns over the strength of its pipeline of new drugs and corruption allegations in Iraq.

Earlier this month, the company said it was investigating claims that it hired 16 state-employed doctors and pharmacists as sales representatives while they continued to work for the government.

Glaxo, which will have majority control of the new consumer healthcare business with a stake of 63.5 per cent, said the proposed transaction will increase its annual revenues by £1.3bn to £26.9bn.