Publications
Partners
London - GlaxoSmithKline the UK’s biggest drug maker, reported second-quarter earnings that beat analysts’ estimates and raised its forecast for the year as sales of new products doubled.
Profit excluding certain costs surged 42% to 24.5 pence from a year earlier, the London-based company said in a statement on Wednesday. That topped the 21-pence average of analyst estimates compiled by Bloomberg.
On that basis, Glaxo forecast an increase in full-year earnings of 11% to 12%, excluding currency effects, up from 10% to 12% previously.
Glaxo is stoking sales of its new HIV and respiratory products as pricing pressure and patent expiration hurt earnings from its best-selling asthma treatment Advair. New product sales doubled to £1.05bn last quarter from £446m a year earlier.
Advair brought in £900m, beating analysts’ estimate of £827.9m.
Total sales for the three-month period climbed 4% on a constant-exchange rate basis to £6.53bn, compared with a £6.34bn average estimate from analysts. Without adjusting for currency fluctuations, revenue gained 11%.
Sales of many of Glaxo’s new products exceeded analysts’ expectations. Its HIV drug Tivicay brought in sales of £225m, compared with an analyst estimate of £213m. Sales of new respiratory drugs of £243m more than offset the Advair impact, and overall respiratory sales were unchanged from a year ago, the company said.
Glaxo’s shares rose as much as 2.8% to 1 714 pence in London trading after earnings were reported, reaching the highest level in almost three years.
The British pound weakened following the UK vote to leave the European Union. That benefits Glaxo, which earns the largest chunk of its revenue in the US and will repatriate the earnings at a more favourable rate.
"Clearly, currency has had a significant impact on our results for the quarter, both in total and in core reporting," chief executive officer Andrew Witty said on a media call. "For GSK this resulted in a tail wind over the quarter of 7% to sales and 26% to core earnings per share."
Glaxo also said the value of its put options in consumer healthcare and HIV joint ventures has increased as a result of the sterling’s depreciation, resulting in balance sheet charges of £1.8bn the quarter.
With Witty and vaccines division chairperson Moncef Slaoui set to retire next year, the company also faces the challenge of finding seasoned leadership to drive sales growth and revitalize its pipeline of experimental medicines.
Witty said the board was considering both internal and external candidates to replace him, and that a decision might be made near the end of the year.
