Having announced a strong set of results yesterday, GlaxoSmithKline chief executive Andrew Witty said that the company’s diversified portfolio has helped it come through a period riddled with the loss of patent protection on key products.
Speaking after GSK posted a 21% increase in operating profit, before major restructuring charges, and a 13% rise in turnover, Mr Witty said the firm has seen “the beginnings of the end of our long period of genericisation of old products, especially in America”. This has been counter-balanced by the “delivery of our strategy to diversify the group with terrific performances from our emerging markets businesses”, where sales grew 43% to £866 million, as well as from the consumer healthcare division (turnover up 9% to £1.23 billion).
In the first quarter, 40% of sales came from consumer, vaccines and dermatology and “that’s an incredible change”, Mr Witty said, and this diversification strategy, over the long run, “should reduce the volatility and risk profile of the company”. In terms of pharma, GSK’s R&D organisation “continues to perform extremely well” in terms of the development of new medicines and getting them into Phase III, he stated, noting the beginning of late-stage trials in the quarter of its new asthma drug Relovair (fluticasone/vilanterol). Mr Witty added that GSK has had 16 new drugs approved in the USA since 2007.
The CEO went on to talk about ‘simplification’, saying “it’s obvious that we need to take out other activities which don’t add the same kind of value’. For example, in the quarter, GSK reduced the number of providers to its office facilities from over 40 to just three and it will “continue to take cost out of our support functions”.
Speaking of the effects of healthcare reform in the USA, notably increased discounts for medicines particularly related to programmes like Medicaid, Mr Witty said “we have been able to absorb this adverse financial impact and we expect to offset any further impact through continued operational performance”. He added that “he transformation we have already instigated within our US business has been focused on ensuring that we are fit to compete in the environment created by this reform”.
Finally he spoke about the claims being made about the safety of the diabetes drug Avandia (rosiglitazone), saying that “the allegations made by some of our critics that we acted improperly around this medicine are unfounded. He concluded that “this debate is indicative of the pressures and challenges that our industry must face and reinforces the need for continued openness and transparency”.
