GlaxoSmithKline cuts full-year sales forecast to flat
THE UK pharmaceutical group GlaxoSmithKline has cut its sales forecast to flat for the full year against a backdrop of intensifying European price cuts as it posted second-quarter core earnings down 5 per cent to 24.6p a share – below expectations.
Rivals Eli Lilly and Bristol-Myers Squibb also reported sharp drops in quarterly profits.
GlaxoSmithKline reported turnover down 4 per cent – or 2 per cent at constant exchange rates – to £6.5 billion (€8.29 billion), and operating profits for the quarter 2 per cent lower at £1.7 billion. Total pretax profits were flat at £1.6 billion.
With European sales down 8 per cent, chief executive Andrew Witty said he was combining the commercial organisations of the region with all others outside North America, placing them under the responsibility of Abbas Hussein, who runs its emerging markets and Asia Pacific divisions.
He described as “unacceptable” the past marketing practices that led to £1.9 billion in fines agreed with US regulators earlier this month, and pledged his commitment to a “values-based decision-making culture inside GSK” to prevent repetition.
GSK also finalised its $3 billion purchase of US company Human Genome Sciences earlier this month and said it expected to complete the acquisition during the third quarter this year, bringing it synergies and benefits of Benlysta, its lupus drug, and two other experimental medicines.
The chief executive stressed strong performance from GSK’s pipeline of experimental medicines, saying it could deliver up to eight new drugs and vaccines over the coming two years.
Tim Anderson at Bernstein Research wrote: “Overall, a slightly disappointing quarter for GSK with a slight miss both on revenues and EPS . . . The longer-term growth continues to look comparatively good.”
Separately yesterday, Eli Lilly and Bristol-Myers Squibb reported big drops in second-quarter profits as the impact of expiring patents hit their bottom lines. Eli Lilly’s net income fell 23 per cent year-on-year to $923.6m, or 83 cents a share. However, that was less than expected and the company said profit margins should improve after 2014, once the worst pain from patent expirations on its top drugs has abated.
Net earnings at BMS fell 38 per cent to $808 million, or 38 US cents a share, following the expiration of its exclusive rights to sell Plavix, used to prevent stokes and heart attacks.