Conclusion

GSK is a good company operating in an industry whose fundamentals have deteriorated since the high growth era that ended a few years ago. To quote Warren Buffet: "When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact."

There seems little prospect of the high growth era returning. The PE ratio and yield indicate that GSK is now regarded by the market as an income stock rather than a high growth stock and that the risks are high in relation to expected growth.