GlaxoSmithKline has just posted its second-quarter results which reveal a 7% fall in operating profit, before major restructuring, to £2.27 billion, while group turnover was down 2% at constant exchange rates, to £6.72 billion.
Pharmaceutical and vaccines sales were down 3% to £5.44 billion, due in part to generic competition which cut sales of Valtrex (valaciclovir) for herpes by 48% to £86 million, while the controversial Avandia (rosiglitazone) diabetes franchise slumped 82% to £26 million; sales of Avandia have been suspended in Europe and its use has been severely restricted in the USA.
Advair/Seretide (salmeterol and fluticasone) for asthma and chronic obstructive pulmonary disease increased 2% to £1.27 billion, while strong performances came from Avodart (dutasteride), for the treatment of benign prostatic hyperplasia (+24% to £188 million) and the heart disease drug Lovaza (omega-3-acid ethyl esters; +14% to £145 million).
Sales of the breast cancer drug Tykerb/Tyverb (lapatinib) were up 7% to £59 million, though the bloodthinner Arixtra (fondaparinux) slipped 1% to £75 million. Lamictal (lamotrigine) for seizures and bipolar disorder, grew 7% to £128 million. Vaccine sales were down 15% to £787 million, hit by the loss of pandemic-related products, while consumer healthcare turnover was up 4% at £1.28 billion.
Chief executive Andrew Witty (pictured) said pharma sales benefited from strong performances in the emerging markets and Japan, while GSK's US business grew 3% on an underlying basis, "helped by favourable Advair stocking patterns, as well as encouraging performances across the portfolio including newly-launched products". Turnover in Europe declined 1% but "this was a creditable performance given price reductions enacted by governments", he said, which adversely impacted sales growth by 6%.
Restructuring nearly over
Mr Witty noted that "our ongoing restructuring programme is near to completion but with savings delivery higher than originally forecast". That is additional annual savings of approximately £300 million, bringing the total expected from the programme to £2.5 billion a year by 2012, and these will be generated with no increase to the previously-disclosed restructuring charges of £4.5 billion, the majority of which have already been taken.
He added that going forward "we continue to apply sustained pressure to GSK’s cost base to realise further savings, through improvements in areas such as support functions, supply chain and procurement efficiency".
Mr Witty stated "we are well on track in the delivery of our strategy…as much of the major restructuring which has taken place over recent years comes to an end". He concluded by noting that GSK’s outlook is very positive".