GlaxoSmithKline Plc. (GSK), has posted significant higher growth in profits during the year ended December 2011 on account of cost cutting measures across all divisions. The net profit has taken a jump of 100 per cent and reached at £5,936 million from £2,961 million in the previous year. Its turnover, however, declined by 3.5 per cent to £27,387 million from £28,392 million. With higher profits, its earnings per share increased to 112.5 pence from 53.5 pence in the last year.
GSK's pharmaceutical sales declined by 1.9 per cent to £18,695 million from £19,056 million on account of lower sales of Advair and Seretide in US and Europe respectively. Respiratory sales improved by 2 per cent to £7,298 million during 2011 and that of cardiovascular and urogenital sales moved up by 8 per cent to £2,740 million. However, its sales of metabolic, anti-virals and central nervous system declined 47 per cent, 27 per cent and 2 per cent respectively to £362 million, £807 million and £1,721 million. Vaccines sales declined sharply by 19.2 per cent to £3,497 million from £4,326 million. Sales of pandemic related products, Avandia and Valtrex declined from £2,285 million to £507 million in 2011. Thus its pharmaceutical and vaccines sales declined by 5.1 per cent during 2011 to £22,192 million.
GSK's sales in the US declined to £7,035 million during 2011 from £7,648 million in the previous year. Its sales in Europe also moved down by 13 per cent to £5,767 million from £6,548 million. The sales in emerging markets went up by 6 per cent to £3,680 million from £3,556 million and that in Asia Pacific including Japan increased by 7.2 per cent to £3,326 million from £3,102 million. Its ViiV Healthcare division recorded minor growth of one per cent during 2011 to £1,569 million.
Andrew Witty, CEO, said, “During the year we delivered underlying sales growth of 4 per cent, strong cash generation, significant R&D progress and we were able to increase shareholder returns through ordinary dividend growth of 8 per cent, plus a supplemental dividend of 5 pence and £2.2 billion of share buy backs. In total, we distributed £5.6 billion in cash to shareholders in 2011 – an increase of 75 per cent versus 2010. This performance has been achieved despite continued economic pressures and political instability in Europe and certain emerging markets which have affected both consumer demand and government purchasing. Pricing pressure in Europe adversely impacted underlying growth in the region by around 5 percentage points during 2011. We anticipate a similar impact in 2012:”
“We expect further delivery from our R&D organisation in 2012. I am pleased to confirm that of the 15 late-stage drugs and vaccines we highlighted last year, we have received some or all of the data on nine of them,” he added.
The current operational excellence restructuring programme delivered £2.2 billion of annual savings in 2011, and remains on track to deliver the full annual savings of £2.5 billion by 2012. In addition, further annual savings of £300 million from the ongoing initiatives have been identified and will cost an additional £350 million, the majority of which will be recorded by the end of 2013. The programme is now expected to deliver £2.8 billion of annual savings by 2014.