GlaxoSmithKline (GSK), which completed the three-part inter-conditional transaction with Novartis AG involving its consumer healthcare, vaccines and oncology business on March 2, 2015, has posted net profit of  £8,038 million during the first quarter ended March 2015 as against £719 million in the corresponding period of last year, mainly due to other operating income of £8,712 million. Its sales remained almost stagnant at £5,622 million as compared to £5,613 million. Its R&D expenditure increased to £867 million from £859 million.

Its total pharmaceuticals sales declined by 7 per cent to £3,523 million during the first quarter of 2015. The sales of global pharmaceuticals declined by 12 per cent to £3,077 million and that of ViiV Healthcare improved by 42 per cent to £446 million. Its vaccines sales also improved by 10 per cent to £699 million and that of consumer healthcare division moved up by 24 per cent to £1,381 million. All three businesses reflect the impact of the Novartis transaction. The global pharmaceutical sales declined primarily due decline of 9 per cent in respiratory sales and a 20 per cent decline in sales of established products. Sales of oncology products in the first two months, prior to the disposal to Novartis, amounted to £216 million, an 18 reduction compared with the three months of Q1 2014.

Its total sales in US declined by 5 per cent to £1,795 million. However its sales in Europe and other international market improved by 5 per cent and 2 per cent to £1,557 million and £2,270 million respectively.

Its pharmaceutical sales in US declined by 23 per cent to £1,019 million. With in respiratory, Advair sales in US were down by 21 per cent to £392 million and Flovent sales declined by 38 per cent to £83 million. Similarly, lower sales in established products was due to Lovaza, which declined by 75 per cent to £28 million following the launch of generic competition in April 2014. Its pharmaceutical sales in Europe declined by 7 per cent to £815 million.

Sir Andrew Witty, CEO, said, “With completion of the Novartis transaction, we have reviewed future prospects for the newly shaped group, including the opportunities offered through the integration and our cash allocation strategy. For 2015, our financial performance will be impacted by the dilutive effect of the transaction and flow through of headwinds encountered in 2014. We then expect to see a sustained improvement in performance with revenues and earnings expected to grow in CAGR terms over the five year 2016 to 2020.”

GSK's product portfolio is now well diversified with 10 products generating annual revenues of more than £500 million per year. As a result of the Novartis transaction the Group is more balanced with revenues split across pharmaceuticals 59 per cent, consumer healthcare 25 per cent and vaccines 16 per cent on the same basis. The transaction has significantly strengthened GSK's position in the US, Russia, Germany and number of emerging markets, including China. With the newly acquired products from Novartis, GSK has the most comprehensive vaccines portfolio.

Within pharmaceuticals, GSK remains confident of maintaining its global leadership in respiratory well into the next decade. Total respiratory sales are expected to return to growth in 2016. By 2020, the group expects total respiratory sales to be at or above the level of sales in 2015.

HIV is the other key therapeutic franchise in the current pharmaceutical portfolio. Having review this very positive outlook, GSK has concluded that retaining its full, existing holding in ViiV Healthcare is in the best interests of the Group and GSK will not now be initiating an IPO of a minority stake.