GlaxoSmithKline has posted a reasonable set of financial figures but they have been overshadowed by a 61% fall in Chinese sales.

Third-quarter turnover inched up 1% (at constant exchange rates) to £6.51 billion, while core operating profit increased 11% to £2.06 billion. Pharmaceutical and vaccines sales were flat at £5.20 billion, driven by Advair/Seretide (salmeterol and fluticasone) for asthma and chronic obstructive pulmonary disease; however, GSK's top-seller slipped 1% to £1.20 billion.

The Avodart (dutasteride) franchise, for the treatment of benign prostatic hyperplasia, increased 6% to £207 million, while Lamictal (lamotrigine) for seizures and bipolar disorder, fell 6% to £139 million, due to generic competition. Heart drug Lovaza (omega-3-acid ethyl esters) fell 12% to £135 million.

As for newer products, Benlysta (belimumab) for lupus had sales of £42 million, while the sarcoma drug Votrient (pazopanib) reached £91 million. Promacta/Revolade (eltrombopag) for immune thrombocytopenia contributed £49 million, up 43%, while vaccines were up 3% to £987 million.
Chief executive Sir Andrew Witty (pictured) said the quarter reflected "broadly-based sales growth, significant new product output from the pipeline and further growth in returns to shareholders". He added that in R&D, we received four approvals and…are making substantive progress to expand our respiratory portfolio".

Europe performs well

Geographically, he was pleased with Europe, where sales for the pharmaceuticals and vaccines business were up 5%. Sir Andrew said that
sme of this improvement reflects the annualisation of government price cuts and "it is clear that the commercial environment in Europe remains challenging". Nevertheless, he added that "we are now seeing benefits from the measures we have taken to restructure and focus this business around core assets such as Seretide and key growth opportunities such as vaccines and our oncology portfolio".

As for China, where the company has been mired in a bribery scandal, the sales slump caught the eye. The 61% decline was worse than most analysts expected but Sir Andrew said that "there is no question about our commitment to China".

He added that "it is a critically important country of the future. We are absolutely committed to work with the authorities, get through the investigation, find out what's happened and take the actions necessary". Commenting on the results, Franc Gregori, an analyst at Edison Investment Research, said that "while noise will continue around sales in China – accounting for around 4% of group sales – it is the resilience of GSK's established brands that is encouraging".

He concluded by saying that "we see this as key in the transition to new product-driven growth and believe it will be smoother for GSK than for a number of its peers".