GlaxoSmithKline and Pfizer, the pharmaceutical giants, have pooled their HIV-related activities in an independent company.

Viiv Healthcare, based in London, will have 500 employees and will focus solely on the HIV market, which has proved a tough sector for the two parent groups over the past few years.

GSK, which is contributing 90 per cent of the £250 million start-up costs, will be the major shareholder with an initial 85 per cent of the equity.

Dominique Limet, the chief executive of the new company after stepping down as GSK’s head of personalised medicines, believes the drug sector has failed to address the needs of people with the condition over the past few years, particularly when developing drugs for children.

Dr Limet said: “Being smaller and being forced to listen will make us a nimbler company that has a deeper and broader understanding of the needs of the patients.”

Despite great strides in the treatment of HIV over the past two decades, Dr Limet argued that infection rates are rising and that even when a patient has access to proper treatment, those with the virus live, on average, ten years less than people who are not infected. “This is unacceptable and we must stay relentless in the pursuit of new medicines,” he said.

He added that the death rate in children with the virus is twice as high as that of the adult population and the company will focus on paediatric treatments. He said that 2 million children have HIV around the world.

Companies such as Roche have quit the market for new HIV treatments and Dr Limet said that both GSK and Pfizer would have spent less on research and development over the coming years than Viiv plans to. “We needed a new approach,” he said.

Viiv has ten medicines available and a pipeline of seven potential treatments, five of which are in phase II development. Dr Limet highlighted the potential of Pfizer’s anti-viral drug Selzentry, which stimulates the patient’s immune system, as a growth driver.

The merged HIV businesses had combined revenue of £1.6 billion last year. ViiV has 11 marketed medicines and seven molecules in its portfolio.

GSK developed AZT, the world’s first Aids treatment, but has lost market share to its Californian rival Gilead over recent years. Gilead has a market share of 31 per cent compared with Viiv’s 19 per cent. Dr Limet expects that gap to narrow as the newly established company develops new treatments.

Some pharmaceutical groups, including Roche, have withdrawn from the HIV drug market, blaming increasing difficult commercial conditions.