GlaxoSmithKline's Q1 sales rise 11 percent, driven by growth of new drugs

GlaxoSmithKline announced Wednesday that first-quarter profit reached 282 million pounds ($410 million), down from 8.1 billion pounds ($11.8 billion) in the year-ago period, when the figure was boosted by proceeds from an asset swap with Novartis. Sales in the quarter rose 11 percent year-over-year to 6.2 billion pounds ($9 billion), topping consensus estimates of 6 billion pounds ($8.7 billion). 

In the quarter, sales of prescription drugs fell 1 percent on a constant exchange rate basis to 3.6 billion pounds ($5.2 billion), while revenue from vaccines jumped 23 percent on the same measure to 882 million pounds ($1.3 billion). GlaxoSmithKline noted that the vaccines business benefited in both Europe and the US from products acquired via the Novartis transaction, particularly the meningitis portfolio, and was also helped by purchases from the US Centers for Disease Control and Prevention. Meanwhile, revenue from consumer healthcare products rose by 26 percent year-over-year to 1.8 billion pounds ($2.6 billion).

CEO Andrew Witty remarked "this strong first-quarter performance demonstrates the momentum we have...driven by growth in sales of our new products, effective cost control and execution of our restructuring and integration plans." Witty pointed out that revenue from new drug products was more than twice as high in the quarter at 821 million pounds ($1.2 billion) than in the year-ago period, adding that these now make up one-fifth of total pharmaceutical sales.

Respiratory drug revenue slipped 2 percent in the quarter, totalling 1.4 billion pounds ($2 billion), mainly reflecting lower sales of Seretide in Europe and in the US, where it is sold as Advair, as well as"the continuing transition globally of the respiratory portfolio to newer products," the company said. Combined Seretide/Advair sales were down 19 percent on a constant currency basis to 753 million pounds ($1.1 billion), missing analyst estimates of 788 million pounds ($1.15 billion).

Regarding newer respiratory therapies, combined revenue from Relvar/Breo Ellipta more than doubled to 111 million pounds ($161.8 million), but missed expectations of 116 million pounds ($169.1 million), while Anoro Ellipta also saw sales more than double, reaching 33 million pounds ($48.1 million) in the three-month period, below forecasts of 38.3 million pounds ($55.8 million). "We do expect to grow our respiratory business this year," Witty said, but cautioned that "revenue growth will be lower than the volume growth because obviously part of the effect of genericisation impact is price."

In other results, the HIV therapy Triumeq came in ahead of the 321.4 million pounds ($468 million) analysts had projected, more than doubling sales at 328 million pounds ($477 million) during the quarter. Tivicay revenue was up 60 percent and totalled 188 million pounds ($274 million), slightly below estimates of 192.4 million pounds ($280 million). Meanwhile, sales of the prostate cancer drug Avodart declined 26 percent to 132 million pounds ($192.4 million), beating projections of 128.4 million pounds ($187.1 million), hurt by generic competition in the US and a supply disruption in Japan.

"Overall, the quarter reflects the progress we have made in our strategy and our ability to allocate capital across our three businesses to generate the best returns," Witty explained, adding that "together with the roll out of our new commercial model, we believe the group is well placed to maximise the opportunities, and respond to the competitive pressures and challenging pricing dynamics, that we see in the global healthcare environment." Commenting on the results, Bernstein analyst Tim Anderson stated "a rebound has started, if measured from the rather deep hole that had been dug." 

For the full year, GlaxoSmithKline specified that it expects core earnings per share to grow between 10 percent and 12 percent on a constant exchange rate basis, whereas previously the company had guided for a double-digit increase. 

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