Revenue slump for GSK as Avandia sales stall
pharmafile | October 22, 2010 | News story | Sales and Marketing | Avandia, GSK, GlaxoSmithKline, UK science budget, patent box, pharma's 2010 results, pharma's Q3 results
GlaxoSmithKline has posted a third quarter loss after sales of its troubled diabetes drug Avandia and pandemic influenza products fell.
The company saw its total sales decline by 2% to £6.8 billion in the period, but they grew by the same amount once its H1N1 products and Avandia were stripped out.
In September Avandia was suspended from the European market by the EMA and severely restricted in the US by the FDA after safety concerns arose from ongoing post-marketing meta-analyses.
Sales of the drug have long been waning, as questions over its safety mounted, and the regulators’ actions will further the trend that saw sales drop 65% to £70 million in the third quarter.
Relenza also suffered a major sales drop, down 91% to just £18m, but this was expected as the flu pandemic peters out.
But sales could pick up in the fourth quarter following reports from the World Health Organization (WHO) of a new mutation of last year’s swine flu strain emerging in Australasia.
In GSK’s traditional markets the bad news continued, with sales decreasing by 8% in the US, 9% in Europe and 2% is Asia Pacific/Japan. This was partially offset by strong growth in emerging markets, representing a growth of 14% to £873m.
GSK also saw a drop in revenue in the last quarter after it was forced to take three separate legal hits – including legal cases concerning Avandia – amounting to £1.58bn.
Its biggest seller Seretide, indicated for respiratory diseases, grew a steady 5% to £1.24bn. Overall vaccine sales still grew by 19% despite the drop off in H1N1 products, and reached £982m.
GSK’s chief executive Andrew Witty said: “GSK’s growth/risk profile is fundamentally changing. Our strategy to diversify our business is generating sustained sales growth from key investment areas.”
Witty added that at the same time, GSK’s generic exposure in the US is reducing and regulatory uncertainty around Avandia has diminished now that the FDA and EMA have made their decisions over the troubled diabetes drug.
However, Witty said that this is not to say that significant issues do not remain. “Clearly our operating environment is challenging and the measures being put in place by governments to reform healthcare and reduce deficits are impacting our performance along with others in our sector.
“In conclusion, this third quarter marks another positive step forward in execution of our strategy and, despite the challenging environment we face, I remain confident that GSK’s outlook continues to improve and that we are well placed to deliver long-term growth and value for shareholders.”
Science budget ring-fenced
Meanwhile, Witty expressed his relief that the science budget had escaped George Osborne’s swingeing cuts and had its funding ring-fenced for this Parliament’s duration.
Witty also said more clearly than ever that GSK would further boost its presence in the UK if the patent box – a £1.3 billion initiative that would see a lower rate of tax on patent income – is passed.
Ben Adams
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