GSK sees strong Q3 after battling headwinds

GlaxoSmithKline has posted a set of healthy figures for the third quarter, underlying its return to growth after a tough year.

Group turnover was up 3% for the third quarter to £7.1 billion, with underlying pharma and vaccines up 3 per cent.

Underlying growth was up 6% when troubled diabetes drug Avandia, herpes treatment Valtrex (which has succumbed to generic erosion) and pandemic products are taken out of the equation, representing a stable return to growth for the UK firm.

Andrew Witty, chief executive of GSK said: “As evidenced this quarter, the drag from Avandia, Valtrex and pandemic products has significantly reduced and although there is likely to be some quarterly variability, we continue to expect underlying sales growth to translate into reported sales growth in 2012.”

Vaccines were particularly strong in the third quarter, up 14%, principally due to sales of Cervarix for the rollout of Japan’s national HPV programme, translating into a 57% growth in the region.

GSK saw steady results in the US, with underlying growth – at constant exchange rates – reaching 1%, with President Obama’s health reforms negatively impacting the firm. 

Europe was the worst affected region with underlying sales down 4% to £1.41 million as austerity measure continue to bite pharma.

This was offset by another strong showing in emerging markets, up 11% to £949 million for the quarter. 

Sales of its top respiratory drugs continued a steady decline, with its top-selling drug Seretide down 3% to £1.22 billion, mainly from low sales in the US.

Most of its other products saw steady increase however - with Avodart, licensed to treat benign prostatic hyperplasia, was up 19% to £188 million. 

Bi-polar drug Lamictal also saw a healthy growth of 18%, up to £153 million.

During the quarter GSK launched one its biggest future hopes – the lupus treatment Benlysta, with partner Human Genome Sciences. 

The firm reports that total sales reached $18.8 million for its first full quarter, of which it received £6 million - this has disappointed analysts, who forecast at least $20 million, and will only serve to fuel takeover speculation between the two firms as HGS falters in its attempts to become profitable.

Share buyback

Witty added that the firm would continue its share buy-back scheme, which will be partly financed by the upcoming sales of its OTC business.

“The performance of the business and resulting cash generation is allowing us to continue to increase returns to shareholders.

“Today we have announced a further 6% increase in the dividend to 17p.  In addition, our expectations for share repurchases this year have increased from around £2 billion to up to £2.3 billion,” he said.

Ben Adams