GlaxoSmithKline and Swiss rival Novartis are to create a consumer healthcare powerhouse as part of a string of deals affecting their oncology and vaccines portfolios.

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

In addition, Glaxo is selling its oncology portfolio and related research and development activities to Novartis for up to 16 billion US dollars (£9.5bn) and buying the Swiss firm’s vaccines business for an initial 5.25 billion US dollars (£3.1bn).

Separately, Novartis is to sell off its animal health division to Lilly for about 5.4bn US dollars (£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 4bn US dollars (£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 5 per cet higher following the announcement, while rival AstraZeneca was up 8% 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 UK-based company said it was investigating claims that it hired 16 state-employed doctors and pharmacists as paid sales representatives while they continued to work for the government.

Panmure Gordon analyst Savvas Neophytou said: “Today’s transaction shows management will not sit idly by waiting for the pipeline to mature but will take brave decisions to unlock shareholder value.”

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.

More than 60 per cent of revenues will now come from pharmaceuticals, with 24 per cent from consumer healthcare and 14 per cent from vaccines.

The acquisition of the vaccines business will add four products to Glaxo’s late-stage development pipeline and strengthen its portfolio, notably in meningitis.