By Vivian Lewis, Global Investing

UK-based GlaxoSmithKline (GSK) lost its ethical way and reputation due to promotions for tranquilizers aimed at teenagers -- even though the drugs were never approved for their use.

The firm has had to pay $3 billion. The settlement is the largest fraud case any firm in the US healthcare industry ever paid. Now you know the bad news. The good news is that the former  managers responsible have been replaced and the company's future drug pipeline is strong.

The company is close to launch early next year of a GLP agonist, albiglutide, which is a once-weekly pill against diabetes.

It has been studied in over 5000 patients in the Harmony 8 trials and data are being tallied for this regulator of blood sugar levels. It appears to have fewer renal and heart side effects that Merck's Januvia and to be well tolerated. The glucogen-like peptide was licensed to Glaxo by Human Genome Sciences.

Another exciting GSK drug is being developed by a joint venture with Pfizer, ViiV, to block the HIV virus in patients who have not been treated before.

At 48 weeks it suppressed the AIDS virus in 88% of those given it vs only 81% in the rival drug, Atripla, mainly because the dropout rate (and the side effects) were lower for Shionigi, which only 2% of patients stopped taking. It is an integrase inhibitor, formally dolutegravir.

A upcoming drugs are based on Kinemed biomarkers to handle wasting diseases, metabolic diseases, and fibrosis.

In addition, another pipeline star is an anthax agent based on biologic monoclonal antibodies which target the anthrax toxin. This also was acquired from Human Genome Sciences, called Raxibucumab. Vaccines are a good growth area thanks to GSK's full range of shots for children, adults, and people at risk.

Incidentally, Glaxo recently announced it is acquiring Human Genome for $3 billion. GSK will no longer have to pay royalties to the company for their lupus drug, Benlysta, and for two other major finds, aliblutide against diabetes, and darapladib, against heart disease.

Overall, GSK is a huge drug operator with revenues of $43 billion last year, and a market cap of $112 billion. Its debt is a relatively modest 37% of cap and Human Genome won't add to it.

The company just reported Q2 results which failed to meet forecasts, reporting a 2% drop in sales and a 5% decline in earnings. However, Morningstar reaffirmed its $49 fair-value target for GSK citing the impact of forex and European slow-down and healthcare budget cuts as causes.

I'd note that analysts tend to be neutral on GSK because of the past scandal; as a result, it is underowned by institutions, at only 10%.

Overall, we recommend GSK for its drug pipeline and consider it a rare bird -- a growth pharma company with a 5% plus yield.

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