GlaxoSmithKline has managed to overcome major production problems to post a solid if unspectacular set of financials for the second quarter, with turnover up 6% to £5.25 billion and pre-tax profits rising 8% to almost £1.7 billion or 20.4 pence per share.
Pharmaceutical sales increased 6% to £4.50 billion, driven once again by the asthma product Seretide/Advair (salmeterol and fluticasone), up 22% to £725 million, while Avandia (rosiglitazone) and Avandamet (rosiglitazone and metformin) for diabetes rose 16% to £352 million.
The rise was particularly impressive given the four-month interruption in the supply of Avandamet which, with the antidepressant Paxil CR (paroxetine controlled-release), saw batches seized by the US Food and Drug Administration and the Department of Justice after they failed to meet manufacturing standards [[07/03/05a]]. The Paxil franchise coped less well with the production problems and sales slumped 47% to £152 million.
There were, however, several other strong performers for GSK, notably Lamictal (lamotrigine) for epilepsy/bipolar disorder, which climbed 28% to £216 million, Valtrex (valaciclovir), for herpes, up 13% to £162 million, and Coreg (carvedilol) for heart disease, also up 13% to £125 million. GSK’s HIV franchise increased 6% to £386 million while vaccine revenues rose 15% to £322 million.
Chief executive Jean-Pierre Garnier was pleased with the results but preferred to focus on the firm’s pipeline and newer products. GSK has recently launched in the USA, with partner Roche, a once-monthly formulation of Boniva (ibandronate) for osteoporosis [[29/03/05a]], and the Parkinson’s disease drug Requip (ropinirole) is now available for the new indication of restless leg syndrome [[06/05/05c]]. In terms of the pipeline, he highlighted the cancer agent lapatinib [[16/05/05b]], for which regulatory approval is due to be sought in late 2006 or early 2007 and aplaviroc, which has just moved into Phase II as an anti-HIV agent [[27/07/05f]].
As is customary on these occasions, Prof Garnier was asked if GSK is looking at mergers and AstraZeneca was mentioned as a possible partner by journalists. However the CEO said such talk is distracting unless the option is “very, very good and can facilitate our success.” He added: “We, of course, continue to look around, as we have always done, but the primary emphasis right now is organic growth and delivery of the pipeline.”
Overall it was a good day for GSK and the results were ahead of Lehman Brothers’ forecasts (whose analysts were excited about the prospects for the firm’s ‘797 respiratory compound which is moving into Phase III this year). However, other brokers were disappointed that GSK did not raise its full-year earnings guidance.