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GSK eyes healthcare expansion, hits targets due to new drugs

Published on 26/10/17 at 10:43am

During the release of Q3 figures, GlaxoSmithKline’s CEO, Emma Walmsley, revealed that the company would consider making moves to bolster its healthcare unit, even as other companies look to slim down.

However, she reiterated that the main focus of the company remains with its core pharma business – pointing towards the success of two products launched as a sign of such an approach.

The talk of healthcare consolidation comes as Pfizer looks increasingly likely to shed its healthcare unit. A number of companies are eyeing a deal for the unit but GSK has the financial clout to pull off the deal, and, in the Q3 report, showed that it is able sustain growth in its own consumer healthcare unit.

Walmsley suggested that GSK saw itself a “consolidator” in a market that is becoming increasingly fragmented. A case in point is that, alongside Pfizer, Merck KGaA revealed that it is also looking divest its own healthcare unit, albeit a much smaller prospect than Pfizer’s.

It is likely that any deal for Pfizer’s unit would be around the $15 billion mark, whilst Merck’s unit would be worth around $4.5 billion.

Emma Walmsley, Chief Executive Officer, GSK said:

“Performance in the quarter showed continued progress with sales growth and improved operating margins. This was driven by targeted cost savings and restructuring and integration benefits, which particularly benefited Vaccines and Consumer Healthcare, and also supported investment in our new products and R&D pipeline. Adjusted earnings per share for Q3 were 32.5p and we remain on course for our full-year earnings guidance, with cash generation continuing to improve. We are also pleased that we have secured major approvals for Trelegy Ellipta in COPD and Shingrix, our shingles vaccine.”

GSK’s Shringrix vaccine was approved only days prior to Q3 postings and its dual drug therapy for HIV looks set to receive approval before the year’s end. The company announced that sales were up 2% overall, with total operating profit increasing by 27%.

Despite these successes, investors were made nervous by the talk of further investment into healthcare – with shares dropped by 5.9%.

Ben Hargreaves

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