25th Apr 2018 13:16
LONDON (Alliance News) - Drugmaker GlaxoSmithKline PLC on Wednesday reported a drop in first-quarter earnings and warned of the negative impact of currency movements on the remainder the year, while also remaining cautious on the outlook for asthma drug Advair in the US.
Shares in Glaxo were down 3.4% at 1,413.00 pence following the update.
For the three months to the end of March, revenue declined 2% to GBP7.22 billion from GBP7.38 billion a year before. Pretax profit fell to GBP1.11 billion from GBP1.55 billion year-on-year.
Operating profit fell 28% to GBP1.24 billion, while earnings per share dropped 48% to 11.20 pence. Adjusted operating profit fell 3% to GBP1.92 billion and adjusted earnings per share fell 2% to 24.60 pence.
"GSK has continued to make good progress in the first quarter with sales growth on a CER basis across all three businesses. We are strongly focused on commercial execution with encouraging starts for our most recent new product launches, Shingrix, Trelegy and Juluca," said Chief Executive Emma Walmsley.
In Pharmaceuticals, revenue fell 4% at actual exchange rates to GBP4.01 billion. Vaccines revenue rose 7% to GBP1.24 billion, but Consumer Health revenue slipped 3% to GBP1.98 billion.
At constant exchange rates, Pharmaceuticals revenue grew by 2%, Vaccines by 13% and Consumer Healthcare by 2%.
Pharmaceuticals was helped by "continued strong growth" in HIV-treatment sales and growth from Nucala and the Ellipta portfolio, including the first full quarter of sales of Trelegy, Glaxo said, adding that this growth was partly offset by lower sales of Seretide/Advair, Ventolin and Established Pharmaceuticals.
HIV-related sales rose 6% in the period to GBP1.05 billion, driven by Triumeq and Tivicay and initial sales of Juluca.
An increase in patient numbers for both Triumeq and Tivicay resulted in sales of GBP606 million and GBP348 million respectively in the period, while Juluca recorded sales of GBP10 million in its first full quarter, having been approved in the US in November last year.
However, within the HIV division, Epzicom/Kivexa sales declined 53% to GBP37 million due to "ongoing generic competition".
Respiratory sales declined 6% at actual exchange rates, but were flat at constant currencies. Within this, Seretide/Advair sales fell 25% to GBP566 million, with sales of Advair in the US sliding 32%.
Vaccines sales were driven by Shingrix - which recorded sales of GBP110 million in its first full quarter in the US and Canda - as well as increased demand for Bexsero and Hepatitis vaccines, which grew 10% and 17% respectively.
Consumer Healthcare saw strong performances from "power brands" in the Pain relief and Oral health categories as well as cold & flu seasonal brands, though the division was hurt by generic competition to Transderm Scop in the US, which saw sales of the product fall 69% year-on year.
By geography, US sales declined 4%, but grew 7% at constant currencies. Europe sales grew 2% at actual exchange rates but were flat at constant currencies, while International sales declined 4% at actual rates but grew 4% at constant currencies.
Sales in Emerging Markets declined 4% at actual exchange rates but grew 4% at constant exchange rates.
Glaxo said it expects to make "continued progress" in 2018, although its expectation for adjusted earnings per share growth is impacted by a "number of factors" including uncertainties related to potential generic competition to Advair in the US.
In the event that no generic competitor to Advair is introduced to the US market in 2018, Glaxo said it continues to expect 2018 earnings per share growth of 4% to 7% at constant exchange rates.
In the event of a mid-year introduction of an Advair generic in the US, Glaxo said it continues to expect full year US Advair sales of around GBP750 million at constant exchange rates.
Seretide/Advair sales in 2017 totaled GBP1.61 billion, which in turn was down 16% at constant exchange rates from the year before.
Turning to foreign exchange in the year ahead, Glaxo said if currency rates hold at the closing rates on March 31 for the rest of the year, the estimated hit to sterling turnover growth would be around 5%.
"If exchange gains or losses were recognised at the same level as in 2017, the estimated negative impact on 2018 sterling adjusted EPS growth would be around 8%," Glaxo added.
Glaxo declared a 19p dividend for the quarter, and continues to target an 80p dividend for the full year.
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