GSK sales suffer double-digit drop
pharmafile | April 28, 2011 | News story | Sales and Marketing | GSK, GlaxoSmithKline
GlaxoSmithKline saw a hefty drop in revenue in the first three months of this year as it struggled to contend with the loss of Avandia and a challenging healthcare environment.
Total group turnover in the first quarter was down 10% to £6.6 billion on constant exchange rates, with pharma sales falling a substantial 14%, down to £5.3 billion on the same period last year.
Except for Asia Pacific, which grew by just 1%, all other regions were down. Japan saw the biggest loss, dropping by 24%, while sales in Europe and US shrank by 23% and 13% respectively.
Loss of sales from Avandia was the major factor behind losses in the mature markets, with revenue from the former blockbuster diabetes drug falling to just £36 million, down 79 per cent.
Avandia was last year removed from the European market and restricted in the US after long-running studies suggested a link between the drug and a number of cardiac events.
GSK’s sales were also hit by the patent loss of its genital herpes drug Valtrex and a continued decline in demand for its pandemic flu products, sales of which slid to just £5 million, down 99 per cent.
More worryingly emerging markets, which are usually a strong growth driver, were also down, falling by 1% primarily due to the loss of pandemic products.
The company’s core products did not fare too well either, with its biggest seller, respiratory drug Seretide, falling 2% to £1.2 billion.
But the recently approved Votrient – set to steal a large portion of the renal cell carcinoma market – got off to a good start, making £17 million for the quarter.
GSK chief executive Andrew Witty said: “Reported sales were down 10%, reflecting a £1 billion reduction in sales of pandemic products, Avandia and Valtrex versus a year ago.
“This impact is set to decline going forward and we expect underlying sales growth to translate into sustainable reported growth in 2012.”
Witty said the underlying sales – excluding Avandia, Valtrex and pandemic products – grew 4%, reflecting growth across the business including in emerging markets, Japan and its consumer healthcare business.
“On the same basis, US and Europe pharma sales declined 4% and 5% respectively, primarily as a result of the year-on-year impact of US Healthcare reform and EU austerity measures.”
Witty added that he expected some volatility in quarterly margins during the year as sales from Avandia, Valtrex and its pandemic products continues to decrease.
The company said it has set £3.5 billion aside for legal bills for the year that includes on-going litigation for Avandia.
There also could be further trouble ahead for the company. US government officials have ordered GSK to produce documents relating to the marketing and promotion of its lipid lowering drug Lovaza.
The Department of Health and Human Services has asked for complete information on its marketing activities from 1 January 2006 to the present day and GSK said it was responding to the subpoena.
Ben Adams
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