GlaxoSmithKline plc, which has completed transaction with Novartis on March 2, 2015, has posted dismal performance during the second quarter ended as its global pharmaceutical sales declined. Its revenues improved by 5.9 per cent to £5,888 million from £5,561 million in the similar quarter of last year. It is the first full quarter since GSK sold its cancer business to Novartis and bought the Swiss group’s vaccines division. It also formed a joint venture for its consumer health business. Its net profit declined sharply by 83.6 per cent to £115 million from £702 million. EPS worked out to 3.1 pence as against 13.6 pence in the last period.
Its global pharmaceuticals sales declined by 12.7 per cent to £2,981 million from $3,414 million basically due to the disposal of the oncology business to Novartis. Its respiratory sales declined by 6 per cent due to declines in Seretide/Advair in both the US and Europe and the continuing transition of the portfolio to newer products. US pharma sales declined by 16 per cent to £1,084 million and that in Europe declined by 18 per cent to £696 million. Sales in emerging market declined by 6 per cent to £771 million. Its sales in China declined sharply by 14 per cent. Its HIV sales increased sharply by 59 per cent to £559 million..
However, its sales from ViiV Healthcare division posted strong growth of 58.8 per cent to £559 million from £352 million. Its vaccines sales also moved up by 7.3 per cent to £814 million from £759 million despite lower sales by 13 per cent in the US. Consumer healthcare division posted strong growth of 47.8 per cent to £1,509 million from £1,021 million.
Its revenues split across pharmaceutical 59 per cent, consumer healthcare 25 per cent and vaccines 16 per cent on a full-year 2014 historic pro-forma basis. The group has more than 40 NMEs in phase II/III clinical development, primarily focused on HIV, oncology, vaccines, cardiovascular, immuno-inflammation and respiratory diseases.
Sir Andrew Witty, CEO, said, “This is our first full quarter of performance since completion of the transaction with Novartis and it is encouraging. Our integration and restructuring plans are on track and we remain confident that we can achieve our targets for this year and return the Group to earnings growth in 2016.”
“New product performance was positive in all three of GSK's businesses, with the standout performance for the quarter coming from our new HIV drugs, Tivicay and Triumeq. Both of these are tracking ahead of recent best-in-class launches, and together generated sales of £294 million. Elsewhere, we saw continued strong uptake for Flonase OTC, an improving market share for Breo Ellipta following the indication for asthma granted in April, and continued uptake of the newly acquired Meningitis vaccines Bexsero and Menveo. Importantly the growth of our new pharmaceutical products is now more than offsetting sales declines of Seretide/Advair.” Witty added.
For the first half ended June 2015, GlaxoSmithKline's revenues improved by 3 per cent to £11,510 million from £11,174 million in the corresponding period of last year. Its pharmaceutical business declined by 7 per cent to £7,063 million due to disposal of the oncology business. Its US Pharma business declined by 20 per cent to £2,103 million. Its pharma sales in Europe also declined by 12 per cent to £1,511 million. Its pharma sales in China declined by 8 per cent. Vaccines turnover improved by 11 per cent to £1,513 million.
Its R&D expenditure declined by 4 per cent to £1,520 million from £1,550 million in the similar period of last year due to the benefit of cost reduction programmes in pharmaceuticals and vaccines as well as the phasing of ongoing project spending. Its net profit went up sharply to £8,153 million from £1,421 million due to extra-ordinary income of £8,455 million as compared to £46 million in the last period.
The core EPS or the full year 2015 is expected to decline at a percentage rate in the high teens primarily due to continued pricing pressure on Seretide/Advair in US and Europe, the dilutive effect of the Novartis transaction and the inherited cost base of the Novartis businesses. However, GSK expects to see a significant recovery in core EPS in 2016.