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Apr-23-2008US Generics cut into GlaxoSmithKline 1Q profits(topic overview)
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Sales of heart medication Coreg fell 77 percent to 48 million pounds ($95 million), following the introduction of generic competition in September. Other products hit by generic competition included the antidepressant Wellbutrin, down 3 percent, the Flixonase/Flonase treatment for rhinitis, down 33 percent, and the anti-nausea drug Zofran, where sales fell 69 percent. Glaxo said it expected to file additional information about Cervarix, its cervical cancer vaccine, with the U.S. Food and Drug Administration in the second quarter. [1] Sales of heart medication Coreg fell 77 per cent to 48 million pounds ($95 million), following the introduction of generic competition in September. Other products hit by generic competition included the antidepressant Wellbutrin, down three per cent, the Flixonase/Flonase treatment for rhinitis, down 33 per cent, and the anti-nausea drug Zofran, where sales fell 69 per cent.[2]
LONDON (Reuters) - GlaxoSmithKline Plc (GSK.L: Quote, Profile, Research ) profits fell 5 percent in the first quarter, hit by tumbling sales of diabetes drug Avandia and generic competition to other products, the world's second biggest drugmaker said.[3] GlaxoSmithKline plc's net profit fell 13.7% in the first quarter from the year-earlier quarter, hit by competition from low-cost generic drugs and sharply lower sales of the diabetes drug Avandia.[4]
LONDON (SHARECAST) - Lower sales of diabetes drug Avandia and stiffer generic competition knocked GlaxoSmithKline's first quarter profits, with a decline in earnings also still expected over the full year.[5] GlaxoSmithKline's profits dropped 13 percent in the first quarter as the British drug maker was battered by competition from generics and declining U.S. sales of the drug Avandia.[6]
Generic competition and falling sales of diabetes treatment Avandia lowered profit at GlaxoSmithKline in the first quarter, the company said Wednesday.[7] GlaxoSmithKline said first quarter profits dropped 13% after results showed a sharp fall in sales for under-fire diabetes treatment Avandia.[8]
Sales of controversial treatment Avandia slumped by 56 percent to 191 million pounds. "Our performance this quarter was in line with our expectations," said outgoing chief executive Jean-Pierre Garnier. "We continue to see sustained growth from key areas of our business such as (asthma treatment) Seretide/Advair, vaccines and consumer. [9] GlaxoSmithKline shares were up 0.4 percent at 1106 pence ($21.96). "Our performance this quarter was in line with our expectations," said J.P. Garnier, who is stepping down as chief executive officer in May. "We continue to see sustained growth from key areas of our business such as Seretide/Advair, vaccines and consumer.[1]
The company reported $11.3 billion in sales, up from $10.9 billion a year ago. Sales of pharmaceuticals in the U.S., where GSK generates about half of its worldwide sales, decreased 10 percent to $4.25 billion. "Our performance this quarter was in line with our expectations," said Jean-Pierre Garnier, GSK's chief executive, in a prepared statement.[6] Seretide/Advair sales rose by 10% to '954m while vaccine sales were up 10% to '436m. Outgoing chief executive Jean-Pierre Garnier said the performance was in line with its expectations, adding that GSK continues to expect a mid-single digit percentage decline in business performance EPS this year at constant exchange rates.[5]
The world's second largest drug company by sales after Pfizer Inc. warned that the company faces a tough year, reiterating that it expects earnings per share to decline in 2008 by a mid-single-digit rate at constant exchange rates. Chief Executive Jean-Pierre Garnier said in an interview that a good portion of Glaxo's sales will be eroded this year and next by low-cost generics.[4] Glaxo - like other firms - has faced tough competition from generic drugs. While the firm has stressed that the benefits of its Avandia drug outweigh the risks, chief executive JP Garnier said it was not obvious that its sales would improve. He added that the firm continued to see sustained growth from key areas such as its Seretide/Advair asthma drug, vaccines and consumer healthcare items during the quarter that ended on 31 March.[10]
Glaxo, based in London, said sales of asthma medication Seretide/Advair rose 10 percent to 954 million pounds ($1.89 billion 1.19 billion euros), with strong growth in all regions; while sales of Avandia, for type 2 diabetes, fell 56 percent to 191 million pounds ($379 million 238 million euros).[1] Earnings per share, judged by business operating performance, was 25.6 pence, compared with 27 pence last time. The company booked 87 million pounds of costs related to its restructuring programme. Avandia sales fell 56 percent to 191 million pounds in the quarter, but this was somewhat offset by a 10 percent sales rise for Advair, Glaxo's biggest-selling product, to 436 million pounds.[11] On a positive note, sales increased 10 percent for GSK's best-selling drug, the asthma inhaler Advair. They were 954 million pounds, or $1.9 billion, in the quarter. GSK said it would meet its previously given 2008 forecast, which called for earnings per share declines in the "mid-single digits."[7]
Net profits dived 13.7 percent to 1.307 billion pounds (1.63 billion euros, 2.6 billion dollars) in the three months ending March 31, 2008, compared with 1.514 billion pounds in the same period of the previous financial year, GSK said in a quarterly earnings report. Pre-tax profits were down 9.5 percent at 1.9 billion pounds, while revenue climbed by 2.0 percent to 5.592 billion pounds as GSK offset lower Avandia sales with growth in its inhaled medicines and vaccines divisions.[9] LONDON (Thomson Financial) - GlaxoSmithKline (nyse: GSK - news - people ) Plc. posted first-quarter sales of 5.686 billion pounds, compared with 5.592 billion last time, largely in line with expectations, as the company offset lower sales of diabetes drug Avandia with growth in its inhaled medicines and vaccines divisions.[11]
LONDON (Reuters) - GlaxoSmithKline Plc's (GSK.L: Quote, Profile, Research ) chief executive said on Wednesday that sales of diabetes drug Avandia had stabilized recently but it was too early to say if the business hit by safety scares would recover.[12]
LONDON — GlaxoSmithKline PLC on Wednesday reported that first-quarter profit fell more than 13 per cent from a year ago as drug sales were hit hard by competition from generics in the United States.[2] GlaxoSmithKline PLC on Wednesday reported that first-quarter profit fell 13.7 percent from a year ago as generic competition in the United States cut into sales of its anti-depressant and heart medication drugs.[1]
Among the drugs worst hit by generic competition were Coreg, for heart disease, which saw sales plunge 77% to ''48 million, and anti-depressant Wellbutrin, down 3% at ''126 million. Its hayfever treatment Flixonase/Flonase also saw sales drop 33% while anti-nausea drug Zofran fell 69% as competition from rivals heated up. Its biggest selling drug, Seretide/Advair, continued to see sales rise, up 10% at ''954 million, ahead of the ''911 million expected by analysts.[8]
"However, sales were impacted by generic competition and declines in Avandia sales." The company also booked 87 million pounds of costs related to its ongoing restructuring programme. Andrew Witty, who is head of Pharmaceuticals Europe for GlaxoSmithKline, will succeed Garnier following the latter's retirement at the end of May 2008.[9] Glaxo added that pharmaceutical turnover fell 4% to '4.8bn, affected by generic competition to products in the U.S. and lower sales of Avandia.[5]
The results were dragged lower by the Avandia sales fall, as well as competition from cheaper generic rivals, which combined to see pharmaceutical revenues drop 4% to ''4.79 billion.[8] The first quarter figures were marginally ahead of market forecasts, with sales up 2% at ''5.69 billion despite the Avandia knock. It said strong sales of consumer healthcare products, such as Sensodyne toothpaste and energy drink Lucozade, helped offset the pharmaceutical declines, with the division seeing an 8% lift in revenues to ''893 million.[8] The group revealed Avandia sales dived by 56% to ''191 million in the first three months of the year, after demand for the product suffered in the wake of claims made last year that the drug increased the risk of heart attack.[8]
At constant exchange rates, GSK says, sales fell 3 percent. Sales of Avandia, the GSK diabetes drug that has seen its sales falter ever since a May 2007 report in the New England Journal of Medicine linked the treatment to an increased risk of heart attack, dropped 56 percent.[7] Revenue for the quarter was up 1.6 percent compared with a year ago, mainly because of higher sales of GSK's asthma drug Advair, over-the-counter treatments and vaccines.[6] Vaccines sales increased by 10 percent to 436 million pounds. GSK said it is on track to fulfil its financial guidance for the year.[11]
Operating profit was 2.05 billion pounds ($4.1 billion) on sales up 2 percent at 5.69 billion, equivalent to underlying "business performance" EPS of 25.6 pence.[3] Profit for the three months ending March 31 was 1.3 billion pounds ($2.58 billion) compared to 1.5 billion pounds a year earlier.[1]
Revenue for Glaxo - the world's second-largest drug maker after Pfizer Inc. - rose 1.6 per cent to 5.69 billion pounds ($11.3 billion), but in the key U.S. market, revenue fell 10 per cent to $4.25 billion.[2] Total revenue inched forward to 5.69 billion pounds ($11.3 billion) from 5.6 billion pounds on the strength of the pound.[7]
Including restructuring charges related to the company's worldwide layoffs, net income at GSK (NYSE: GSK) was 1.31 billion pounds ($2.65 billion) in the quarter.[7]
The drug maker is in the midst of a three-year restructuring meant to save $1.4 billion in costs. Part of those cuts have come in the Triangle, with about 70 of the more than 1,000 workers at the company's Zebulon manufacturing plant losing their jobs.[7] GSK, which has a U.S. headquarters and a manufacturing plant in the Triangle, reported $2.65 billion in profits for the three months ended March 31, compared with about $3 billion the same period a year ago.[6] Profit was 1.3 billion pounds (US$2.58 billion) compared with 1.5 billion pounds a year earlier.[2] Profits before tax came it at 1.9 billion pounds, down from 2.1 billion in 2007.[11]
LONDON (AFP) — British pharmaceutical giant GlaxoSmithKline said on Wednesday that first-quarter net profits tumbled, partly because of sliding sales of diabetes drug Avandia. [9] GlaxoSmithKline saw first-quarter profits fall after a sharp decline in the sale of key diabetes drug Avandia.[10]
Sales of the Coreg line of products for heart disease fell 77 percent thanks to the introduction of generic treatment. [7] Pre-tax profit for the three months to March fell from '2.14bn to '1.87bn on sales up from '5.59bn to '5.67bn.[5] The UK-listed firm said pre-tax profits fell 13% to '1.87bn from '2.14bn in the same period a year earlier, prompted by a health scare linked to the drug.[10] Profits were also impacted by an ''87 million hit as the firm continued restructuring the business under plans announced last October to save ''700 million a year. Glaxo has already said it was "inevitable" that some of its 22,000-strong UK workforce would be affected, but has yet to provide details and declined to confirm the number of expected job losses.[8] Glaxo reported pre-tax profits of ''1.87 billion, down from ''2.14 billion in the same period last year.[8]
Glaxo shares were up 0.4 percent at 11.06 pounds by 1215 GMT (8:15 a.m. EDT), broadly in line with the European drugs sector, which rose 0.5 percent. Glaxo reiterated its cautious forecast that underlying earnings per share (EPS) would decline by a mid-single-digit percentage in 2008, in constant currencies. [3]
Revenue from another top-selling drug, antidepressant Wellbutrin, also dropped on generic competition.[7] Demand for Avandia began to evaporate last year after U.S. medical journals concluded that the drug significantly increased the risk of heart attack and cardiovascular problems.[9] The U.S. Food and Drug Administration required a label to be put on Avandia, and similar treatments, warning of increased risk of heart failure.[9]
The quarterly dividend rises by 8% to 13p. This morning, GSK announced the $720m acquisition of U.S. biotechnology outfit Sirtris Pharmaceuticals, enhancing the British drug major's presence in the field of sirtuins. [5] Glaxo agreed on Tuesday to buy U.S. biotech company Sirtris Pharmaceuticals Inc (SIRT.O: Quote, Profile, Research ) for $720 million.[12]
The results were better than forecast and the firm partly managed to offset the fall with improved sales of over-the-counter goods. Other pharmaceutical firms have experienced mixed sales recently. [10] The decline was less than analysts had feared, helped by strong sales of over-the-counter remedies, which offset a decline in pharmaceuticals.[3]
Paul Diggle, analyst at Nomura Code commenting on the quarter said: 'The sales were pretty much in line and a perhaps a touch better than expectations.[11]
SOURCES
1. US Generics cut into GlaxoSmithKline 1Q profits
2. The Canadian Press: U.S. Generics cut into GlaxoSmithKline first-quarter profits
3. Glaxo profit fall as generics weigh | Reuters
4. Free Preview - WSJ.com
5. ShareCast - News you can use
6. newsobserver.com | GSK sees profits fall
7. GlaxoSmithKline profit falls over generics, Avandia - Triangle Business Journal:
8. The Press Association: Glaxo hit by Avandia sales fall
9. AFP: GlaxoSmithKline profits slide in first quarter
10. BBC NEWS | Business | Glaxo hit by diabetes drug slump
11. GlaxoSmithKline Q1 sales 5.686 billion pounds; vaccines and Advair up UPDATE - Forbes.com
12. Glaxo CEO: too early to say if Avandia can recover | Reuters
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