GSK sees profit fall
pharmafile | May 1, 2014 | News story | Sales and Marketing | Advair, China, GSK, Novartis, Q1, Seretide, Witty
GlaxoSmithKline has seen revenue and profit plummet in the first quarter of 2014.
The UK-based company saw turnover fall 13% year-on-year to £5.6 billion while operating profit slipped 33% to £1.0 billion.
GSK has emphasised its ‘core’ results performance for 2014, measuring that against 2013 core results excluding divestments completed last year.
Turnover still falls, but only by 2%, and on this basis, pharma and vaccines fell by 3% although in the US the segment’s turnover was down 10% to £1.13 billion in Q1, with pharma falling 15 per cent.
In Europe turnover rose 3% to £1.0 billion, “reflecting the recent restructuring and refocussing of the business”, GSK insists.
Pharma sales generally suffered because of destocking from wholesalers and retailers, “including, as expected, the unwinding of the stock builds seen in the prior quarter”, the company suggests – activity which has reduced growth by seven percentage points, it estimates.
Its big-selling respiratory treatment Seretide/Advair is under particular pressure, with sales dropping 20% and US respiratory sales down 11% in the quarter.
However, oncology sales were up 31% to £108 million, benefiting from strong performances from Votrient and Promacta, and the recent launches of Tafinlar and Mekinist.
The ongoing corruption investigations in several countries, including most notably China, adversely impacted emerging markets sales growth by two percentage points, GSK says.
In China, sales in the first three months of the year were down 20% to £137 million.
Chief executive Sir Andrew Witty reiterated that GSK was building its business around diversification, delivering more products of value and simplifying operations.
Earlier this month GSK and Novartis announced they are going to combine consumer health units under GSK’s majority (63.5%) control.
Meanwhile GSK will sell its cancer portfolio to Novartis for a maximum of $16 billion, and in turn Novartis will let GSK acquire its own vaccines business for up to $7.1 billion.
The deals are expected to be done by June 2015 and GSK says it will increase annual revenues by £1.3 billion as a result.
Adam Hill
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