The markets have reacted well to GlaxoSmithKline's financials, in part due to the resumption of a share buyback and signs that the company is doing well in the tough US market.

Although profits for the fourth quarter were battered by a £2.17 billion charge relating to fresh legal battles concerning its diabetes drug Avandia (rosiglitazone) and an investigation into its marketing practices in the USA, investors welcomed the news that GSK will restart its share buyback programme this year, the first time since 2008.

The drugs major plans to repurchase between £1-£2 billion of stock and the buyback announcement came a day after GSK sold its stake in Quest Diagnostics to Deutsche Bank and JP Morgan for $1.7 billion, which after tax comes to $1.1 billion. Chief executive Andrew Witty noted that  "divestments of non-core assets to create value for shareholders will continue". That process has begun with Valeant Pharmaceuticals International buying the NorthAmerican marketing rights to the cold sore treatment Zovirax (aciclovir) for $300 million. 

Mr Witty added that as well as increasing the dividend or  buying back shares,  its pot of cash could be used “where returns are more attractive",  to "invest in bolt-on acquisitions". He said he is particularly interested in emerging markets, vaccines and consumer health.