GSK posts strong underlying sales growth
pharmafile | February 8, 2012 | News story | Research and Development, Sales and Marketing | Avodart, GSK, R&D, Seretide, Witty, rotarix
GlaxoSmithKline has posted strong underlying growth for 2011, but warns of a tough year ahead.
The UK firm saw 4% revenue growth last year when certain products are excluded.
These include its diabetes drug Avandia, which was pulled from several big markets in 2010 after safety concerns; the drop off in revenue from pandemic products; and the erosion of its herpes drug Valtrex.
If these items are included, then GSK actually dropped 3% last year at constant exchange rates.
The firm’s chief executive Andrew Witty warned of a tough 2012, but was optimistic over GSK’s ability to take the brunt of these headwinds.
He said: “As we go into 2012, we are mindful of the potential pressures we face given the current global political and economic environment.
“However, we continue to expect to drive further shareholder returns as we seek to grow sales across our broadly based business and improve operational leverage and financial efficiency to deliver strong cash generation.
“We will also continue to invest appropriately in the business to generate sustainable and profitable sales growth, using strict returns criteria,” he added.
Pharma sales were up 4% and vaccines up 11% when Avandia, Valtrex and pandemic products are taken out of the equation.
A strong showing in emerging markets and a 28% growth in Japan coupled with a 10% increase in Asia-Pacific, drove this growth.
This helped offset the flat sales from the US and a negative growth of 4% in Europe, where austerity measures by governments have taken a bite out of revenue.
Sales of its biggest selling drug Seretide, licensed to treat asthma, were flat at £5.1 billion.
Urinary drug Avodart, its second biggest selling medicine, saw sales of £748 million, up 20% on last year.
Rotarix, for the prevention of gastroenteritis, along with pneumococcal vaccine Synflorix were the biggest growth drivers for the vaccines segment, up 31% to £300 million and 57% to $350 million respectively.
Its flu pandemic vaccine continued to slide as sales dwindle from its 2009 peak, down 98% to just 18 million compared to 2010.
Legal charges
The firm said that it set back £2.8 billion for potential legal and dispute costs for this year.
It has already paid out $3 billion to the US Department of Justice for the firm’s marketing and sales practices since 2004 – including the development and marketing of Avandia – and the possible inappropriate use of pricing exceptions under the Medicaid rebate programme.
GSK said there is still more to pay out for these investigations this year, and would be taking an unspecified amount from its £2.8 billion pot to cover these charges.
R&D updates
GSK said that a key element of its strategy in recent years has been to improve its R&D returns and productivity, and believes it now has the right model to achieve this.
Witty said: “We expect further delivery from our R&D organisation in 2012. I am pleased to confirm that of the 15 late-stage drugs and vaccines we highlighted last year, we have received some or all of the data on nine of them.
“Most importantly, one has already filed and we have three more ready to file. In addition, our quadrivalent flu vaccine, which was not included in the 15, has progressed very quickly and will also file very shortly.”
Witty said he expected a number of Phase III development programmes to be completed this year.
“All this comes with increasing signs that we can replenish our pipeline on an ongoing basis,” he added.
GSK also said that the return on investment from its research and development pipeline had risen to 12% from 11% two years ago, and it was on track for a “long-term” target of 14% with 10 new drugs that could be filed for regulatory approval this year and up to 30 to enter late-stage development in the coming three years.
Ben Adams
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