GlaxoSmithKline (GSK) has suffered heavy setback during the third quarter ended September 2011 due to addition austerity measures and genericisation as well as discontinuation of certain products in US. The company's net earnings declined by 17.1 per cent to £1,196 million from £1,443 million in the corresponding period of last year. Its turnover also nosedived by 8.1 per cent to £6,527 million from £7,104 million.
GSK's sales in US declined by 8 per cent to £2,144 million and that in Europe moved down by 9 per cent to £1,717 million. US sales declined due to the loss of sales of Vesicare together with sales declines of Avandia and a number of older products, particularly Arixtra and Valtrex. Its sales in Japan also declined by 22 per cent to £506 million. Its sales in emerging markets like Middle East/Africa, Latin America, China and India moved up by 10 per cent to £1,744 million.
Its pharmaceuticals and vaccines sales in Europe declined by 16.9 per cent to £1,159 million from £1,395 million and that in US moved down by 5.3 per cent to £1,788 million from £1,888 million. Similarly, its sales in Japan declined by 25 per cent to £440 million from £587 million. The company's sales in Middle East/Africa, Latin America, China and India improved by 6.4 per cent to £1,203 million from £1,131 million in the similar quarter of last year.
Sir Andrew Witty, CEO, said, “We continue to make progress on our strategy, particularly through increasing our sales exposure to growth businesses, notably emerging markets, and delivering a step-change in output from R&D. As expected reported sales performance this quarter of minus 5 per cent was impacted by demanding prior year comparisons, product disposals and continuing weakness in the European environment for pharmaceuticals and vaccines. Excluding the prior year comparisons, related to sales of Cervarix in Japan and US flu vaccines, and product disposals of OTC brands and Vesicare, sales for the quarter were broadly inline with last year.”
In Europe, sales declined 9 per cent in the quarter, with the decline reflecting an adverse pricing effect of 7 per cent and 2 per cent decline in volumes. It is clear that the European market is facing a prolonged period of significant economic pressure. In this context we are reviewing our current business and assessing how best to respond to this environment and meet the increasingly diverse needs of European governments,” he added.
For the nine months ended September 2012, GSK's turnover declined by 3.8 per cent to £19,629 million from £20,409 million in the similar period of last year. Its sales in US remained flat at £5,234 million as against £5,209 million. However, its sales in Europe and Japan declined by 13.6 per cent and 3.1 per cent to £3,690 million and £1,473 million respectively during the first nine months. Pharmaceuticals and vaccines sales declined by 4 per cent to £15,768 million from £16,421 million and that of consumer healthcare declined 3.2 per cent to £3,861 million from £3,988 million.