Pharmabiz
 

GlaxoSmithKline net earnings dips by over 35% in Q2

Our Bureau, MumbaiThursday, July 24, 2014, 14:00 Hrs  [IST]

GlaxoSmithKline plc has suffered heavy setback during the second quarter ended June 2014 due to stiff competition in US respiratory market and generic competition to Lovaza. Its net earnings declined sharply by 35.2 per cent to £702 million from £1,084 million in the similar period of last year. Its net sales also declined by 16 per cent to £5,561 million from £6,618 million. With lower net profit, EPS worked out to 13.6 pence as against 21.5 pence in the last period. R&D expenditure declined by 22.9 per cent to £809 million from £1,049 million.

The pharmaceutical & vaccines sales declined by 12.5 per cent to £4,539 from £5,185 million in the corresponding quarter of last year. Its sales in US declined sharply by 17.1 per cent to £1,193 million from £1,439 million and that in Europe moved down by 3.9 per cent to £1,019 million from £1,060 million. It also suffer minor setback in emerging markets and its sales declined by 2.1 per cent to £187 million from £229 million. Similarly the sales of established products declined to £696 million from £1,018 million.

The sales of respiratory division declined by 8 per cent to £1,559 million as the sales of Seretide/Advair declined by 12 per cent to £1,095 million. The sales of oncology division improved by 39 per cent to £295 million.

For the first half ended June 2014, GSK's net earnings declined by 32.7 per cent to £1,421 million from £2,113 million in the same half of last year. Its net sales also went down by 14.6 per cent to £11,174 million from £13,089 million as sales of pharmaceutical and vaccines declined by 11.4 per cent to £9,025 million from £10,189 million in the similar half of last year. The company's net sales in US declined by 16.5 per cent to £2,323 million from £2,781 million and that in Europe declined by 1.6 per cent to £2,043 million from £2,077 million. Its sales in Emerging market declined by 5.8 per cent to £1,513 million from £1,606 million. The sales of established products decreased by 25.3 per cent to £1,510 million from £2,021 million. The R&D expenditure declined to £1,668 million from £1,953 million.

Andrew Witty, CEO, said, “We have made significant strategic progress during the first half of this yea, announcing our innovative 3-part transaction with Novartis and progressing the launches of multiple new products in our core therapy areas of respiratory and HIV. Our good progress on newly launched products is being offset by pricing and contracting pressure in the US. As we highlighted last quarter, this has resulted in a “step change” reduction in Advair market share and pricing and it is now clear that these pressures are likely to continue.”

“Performance in US this year has also been impacted by generic competition to Lovaza, which has been more substantive and began earlier than we expected. Our performance in the US was the primary reason for pharmaceutical and vaccines sales declining by 4 per cent,” Witty added.

The company is progressing the launches of new products. Tivicay, for the treatment of HIV is set to become its most successful launches with 'new to brand' prescription trends firmly above those seen for recent competitor launches at a similar time post-launch. Tivicay now has 11 per cent market share of the treatment-naive patient population. During the quarter, it received a positive CHMP opinion for its combination HIV treatment, Triumeq and expect an FDA decision before the end of the year. The company entered into a new collaboration with Janssen Pharmaceuticals to develop a combination of Tivicay with the NNRTI, rilpivirine.

Andrew Witty added, “Elsewhere in pharmaceuticals, we continue to evaluate options to maximise the value of our established products. To this end, we have started a process to divest US and European products in our Established Products Portfolio with total sales of around £1 billion. Subject to achieving appropriate shareholder value, we anticipate reaching agreement before the end of the year.” 

 
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