“Pharmaceutical giant, GlaxoSmithKline, is a core holding for many portfolios due to the defensive nature of the sector and the stock, and the competitive yields paid to investors. One of the key attractions of the group over other large pharmaceuticals is the promising pipeline of drugs coming through its research & development (R&D). 2013 was an exceptional year for R&D and approvals and this is likely to continue for the rest of 2014 and into 2015.

“Despite increased levels of generic competition, the company’s Q3 trading update was well received by the market – the decline in sales was not as bad as expected. While performances in the US and Europe were poor, very good growth was seen in the emerging markets. Investors will be encouraged by the news that the company announced an additional cost cutting programme targeting a further £1bn in savings over three years.

“We recommend GlaxoSmithKline as a ‘buy’ based on the longer term prospects from its R&D and product pipeline, along with the stability and dividend income the stock provides.

“The hoped for future improvement should be helped by new products, diversification and increasing exposure to emerging markets.”