GlaxoSmithKline's financials for the first quarter have been overshadowed by the news that it is selling Lucozade and Ribena in a move that could net the UK drugs giant in excess of £1 billion.
Turnover fell 2% to £6.47 billion, while core operating profit fell 11% to £1.93 billion. Chief financial officer Simon Dingemans noted that the figures reflect "difficult comparators", particularly from the disposal of over-the-counter brands from from the like, year-earlier period.
Pharmaceutical and vaccines sales slipped 2% to £5.12 billion, Advair/Seretide (salmeterol and fluticasone) for asthma and chronic obstructive pulmonary disease, was again GSK's top-seller, with revenues up 4% to £1.32 billion, while the Avodart (dutasteride) franchise, for the treatment of benign prostatic hyperplasia, increased 10% to £203 million.
Lamictal (lamotrigine) for seizures and bipolar disorder, fell 9% to £133 million, hit by generic competition in the USA and the heart drug Lovaza (omega-3-acid ethyl esters) slipped 3% to £148 million. As for new products, Benlysta (belimumab) for lupus had sales of £29 million, while the sarcoma drug Votrient (pazopanib) reached £71 million. Vaccine sales were down 11% to £680 million, while consumer healthcare revenues inched up 1% to £1.35 billion.
Staying with the latter and chief executive Sir Andrew Witty (pictured) noted that a strategic review of Lucozade and Ribena has ended and the firm has concluded that "the tremendous growth potential of these iconic brands, particularly outside the core western markets, could be better leveraged by companies with existing category presence and infrastructure in these regions".
As a result, the company is looking to divest the drinks, "subject to the realisation of appropriate value for GSK shareholders", Sir Andrew added. Analysts believe a sale could raise between £1-£1.50 billion.
Spin-off possibility for new older products division
The CEO also unveiled plans to create a "global established products portfolio of our pharmaceutical tail products", which is expected to include over 50 brands with annual sales of around £3.00 billion. Most observers believe that setting up a distinct unit for older drugs (from the beginning of next year) such as the antiulcerant Zantac (ranitidine) and Imitrex (sumatriptan) suggests that GSK could spin off the new division in the future.
On a conference call, Sir Andrew said setting up the unit "is a sensible move for us to make sure we are maximising value in the short run". He added that "of course, it opens optionality for the future".
He went on to say that 2013 is "a key year for R&D pipeline delivery", noting the recent recommendation from advisors to the US Food and Drug Administration for its chronic obstructive pulmonary disease inhaler Breo Elipta (fluticasone furoate/vilanterol). During the first quarter, GSK filed trametinib and a tranetinib/dabrafenib combination for melanoma and albiglutide for type 2 diabetes.
Sir Andrew noted that "this means all six of the key assets we recently highlighted are now under regulatory review in both the USA and Europe".